Forecast Highlights – Short-Term Energy Outlook 09-10

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of September 10, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

U.S. residential electricity price

Forecast Highlights

Global liquid fuels

  • Brent crude oil spot prices averaged $59 per barrel (b) in August, down $5/b from July and $13/b lower than the average from August of last year. EIA forecasts Brent spot prices will average $60/b in the fourth quarter of 2019 and $62/b in 2020. EIA forecasts that West Texas Intermediate (WTI) prices will average $5.50/b less than Brent prices in 2020.
  • EIA forecasts that global liquid fuels consumption will increase by 0.9 million barrels per day (b/d) in 2019, down from year-over-year growth of 1.3 million b/d in 2018. The slowing liquid fuels demand growth reflects EIA’s assumption (based on forecasts from Oxford Economics) of decelerating growth in global oil-weighted gross domestic product (GDP). EIA expects that global liquid fuels demand will increase by 1.4 million b/d in 2020 as a result of an expected increase in global GDP growth.
  • EIA forecasts U.S. crude oil production will average 12.2 million b/d in 2019, up by 1.2 million from the 2018 level. Forecast crude oil production then rises by 1.0 million b/d in 2020 to an annual average of 13.2 million b/d. The slowing rate of crude oil production growth reflects relatively flat crude oil price levels and slowing growth in well-level productivity.

Natural gas

  • The Henry Hub natural gas spot price averaged $2.22 per million British thermal units (MMBtu) in August, down 15 cents/MMBtu from July. This summer, prices have declined amid rising natural gas production, despite high levels of both natural gas exports and consumption in the electricity generation sector. Based on recent price movements and EIA’s assessment that natural gas production will be sufficient to meet expected demand and export levels at a lower price than previously forecasted, EIA lowered its Henry Hub spot price forecast for 2020 to an average of $2.55/MMBtu, 20 cents/MMBtu lower than the August forecast.
  • EIA forecasts that U.S. dry natural gas production will average 91.4 billion cubic feet per day (Bcf/d) in 2019, up 8.0 Bcf/d from 2018. EIA expects monthly average natural gas production to grow in late 2019 and then decline slightly during the first quarter of 2020 as the lagged effect of low prices in the second half of 2019 reduces natural gas-directed drilling. However, EIA forecasts that growth will resume in the second quarter of 2020, and natural gas production in 2020 will average 93.2 Bcf/d.
  • Natural gas storage injections have outpaced the five-year (2014–18) average so far during the 2019 injection season as a result of rising natural gas production. At the beginning of April, the natural gas inventory injection season started with working inventories 28% lower than the five-year average for the same period. By the week ending August 30, working gas inventories were 82 billion cubic feet (Bcf), or 3%, lower than the five-year average of 3,023 Bcf. EIA forecasts that natural gas storage levels will be 3,769 Bcf by the end of October, which is slightly higher than the fiveyear average and 16% higher than October 2018 levels.

Electricity, coal, renewables, and emissions

  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants will rise from 34% in 2018 to 37% in 2019 and 38% in 2020. EIA forecasts that the share of U.S. generation from coal will average 25% in 2019 and 22% in 2020, down from 28% in 2018. EIA’s forecast nuclear share of U.S. generation remains at about 20% in 2019 and in 2020. Hydropower averages a 7% share of total U.S. generation in the forecast for 2019 and 2020, similar to 2018. Wind, solar, and other nonhydropower renewables together provided 10% of U.S. total utility-scale generation in 2018. EIA expects they will provide 10% in 2019 and 12% in 2020.
  • EIA forecasts generally lower wholesale electricity prices in 2019 compared with 2018. The lower forecast prices reflect lower natural gas fuel costs. The first half of 2019, the average U.S. cost of natural gas delivered to power generators was 9% lower than the same period in 2018. EIA expects the delivered cost of natural gas during the second half of 2019 to be 31% lower than last year. Forecast electricity prices in the southeast are less than 1% lower than 2018, while prices in New England are 28% lower.
  • EIA forecasts that U.S. coal production in the second half of 2019 will be 328 million short tons (MMst), or 59 MMst (15%) less than in the second half of 2018. EIA expects that coal exports will continue to fall during the projection period as international demand for U.S. coal is dampened by high Atlantic freight costs in the near term and increased uncertainty in the metallurgical coal market in the longer term. EIA forecasts that U.S. coal consumption will total 593 MMst in 2019 and 548 MMst in 2020, a decline of 14% in 2019 and 8% in 2020.
  • EIA forecasts that utility-scale renewable fuels, including wind, solar, and hydropower, will collectively produce 18% of U.S. electricity in 2019 and 19% in 2020. EIA expects that annual generation from wind will surpass hydropower generation for the first time in 2019 to become the leading source of renewable electricity generation and that it will maintain that position in 2020.
  • EIA expects electric power sector generation from renewables other than hydropower—principally wind and solar—to grow from 409 billion kilowatthours (kWh) in 2019 to 467 billion kWh in 2020. In EIA’s forecast, Texas accounts for 19% of the U.S. nonhydro renewables generation in 2019 and 21% in 2020. California has a share of 15% in 2019 and 14% in 2020. Regionally, the Midwest and Central power regions each have shares in the 16% to 17% range of the U.S. generation total from renewables other than hydropower.
  • EIA forecasts that, after rising by 2.7% in 2018, U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.5% in 2019 and by 1.0% in 2020. In 2019, EIA forecasts that space cooling demand (as measured in cooling degree days) will be lower than in 2018, when it was 13% higher than the previous 10-year (2008–17) average. In addition, EIA expects U.S. CO2 emissions in 2019 to decline because the forecast share of electricity generated from natural gas and renewables is increasing while the forecast share generated from coal, which is a more carbon-intensive energy source, is decreasing.
Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

U.S. Liquid Fuels – Short-Term Energy Outlook 08-06

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of August 6, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

U.S. Liquid Fuels

  • Brent crude oil spot prices averaged $64 per barrel (b) in July, almost unchanged from the average in June 2019 but $10/b lower than the price in July of last year. EIA forecasts Brent spot prices will average $64/b in the second half of 2019 and $65/b in 2020. The forecast of stable crude oil prices is the result of EIA’s expectations of a relatively balanced global oil market. EIA forecasts global oil inventories will increase by 0.1 million barrels per day (b/d) in 2019 and 0.3 million b/d in 2020.
  • EIA expects West Texas Intermediate (WTI) crude oil prices will average $5.50/b less than Brent prices during the fourth quarter of 2019 and in 2020, narrowing from the $6.60/b spread during July. The narrowing spread reflects EIA’s assumption that crude oil pipeline transportation constraints from the Permian Basin to refineries and export terminals on the U.S. Gulf Coast will ease in the coming months. In the July STEO, EIA forecast the Brent-WTI spread to average $4.00/b in 2020. The updated differential forecast reflects EIA’s revised assumptions about the marginal cost of moving crude oil via pipeline from Cushing, Oklahoma, to the Gulf Coast.
  • EIA estimates that U.S. crude oil production averaged 11.7 million b/d in July, down by 0.3 million b/d from the June level. The declines were mostly in the Federal Gulf of Mexico (GOM), where operators shut platforms for several days in mid-July because of Hurricane Barry. EIA estimates that GOM crude oil production fell by more than 0.3 million b/d in July. Those declines were partially offset by the Lower 48 States onshore region, which is mostly tight oil production, where supply rose by more than 0.1 million b/d. EIA expects monthly growth in Lower 48 onshore production to slow during the rest of the forecast period, averaging 50,000 b/d per month from the fourth quarter of 2019 through the end of 2020, down from an average of 110,000 b/d per month from August 2018 through July 2019. EIA forecasts U.S. crude oil production will average 12.3 million b/d in 2019 and 13.3 million b/d in 2020, both of which would be record levels.
  • U.S. regular gasoline retail prices averaged $2.74 gallon (gal) in July, up 2 cents/gal from June but 11 cents/gal lower than the average in July of last year. EIA expects that monthly average gasoline prices peaked for the year in May at an average of $2.86/gal and will fall to an average of $2.64/gal in September. EIA expects regular gasoline retail prices to average $2.62/gal in 2019 and $2.71/gal in 2020.
U.S. liquid fuels product supplied growth
U.S. Hydrocarbon gas liquids product supplied growth
U.S. crude oil production
U.S. commercial crude oil stocks
U.S. liquid fuels production growth
U.S. gasoline and crude oil prices
U.S. diesel fuel and crude oil prices
U.S. gasoline and distillate inventories

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions 08-06

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of August 6, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions

Recent Economic Indicators. EIA used the July 2019 version of the IHS Markit macroeconomic model with EIA’s energy price forecasts as model inputs to develop the economic forecasts in STEO. Using the IHS Markit model, EIA forecasts real gross domestic product (GDP) to grow by 2.6% in 2019 and by 1.8% in 2020, compared with 2.9% growth in 2018.

Energy-Related Carbon Dioxide Emissions. EIA forecasts that, after rising by 2.7% in 2018, U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.3% in 2019 and by 0.5% in 2020. In 2019, EIA forecasts that space cooling demand (as measured in cooling degree days) will be lower than in 2018, when it was 13% higher than the previous 10-year (2008–17) average. In addition, in 2019, EIA expects U.S. CO2 emissions to decline because the forecast share of electricity generated from natural gas and renewables is increasing while the forecast share generated from coal, which is a more carbon-intensive energy source, is decreasing. EIA’s projected emissions decline is lower in 2020 than in 2019 because it forecasts that both heating and cooling requirements will be slightly lower than normal. At the same time, the forecast coal share of generation will remain about the same as in 2019 while the natural gas share declines. Although EIA forecasts that generation from renewables will continue to increase in 2020, a forecast decrease in nuclear power offsets 24% of the renewables’ gain.

U.S. carbon dioxide emissions growth

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Prices – Short-Term Energy Outlook 08-06

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of August 6, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Prices

  • Brent crude oil spot prices averaged $64 per barrel (b) in July, almost unchanged from the average in June 2019 but $10/b lower than the price in July of last year. EIA forecasts Brent spot prices will average $64/b in the second half of 2019 and $65/b in 2020. The forecast of stable crude oil prices is the result of EIA’s expectations of a relatively balanced global oil market. EIA forecasts global oil inventories will increase by 0.1 million barrels per day (b/d) in 2019 and 0.3 million b/d in 2020.
  • EIA expects West Texas Intermediate (WTI) crude oil prices will average $5.50/b less than Brent prices during the fourth quarter of 2019 and in 2020, narrowing from the $6.60/b spread during July. The narrowing spread reflects EIA’s assumption that crude oil pipeline transportation constraints from the Permian Basin to refineries and export terminals on the U.S. Gulf Coast will ease in the coming months. In the July STEO, EIA forecast the Brent-WTI spread to average $4.00/b in 2020. The updated differential forecast reflects EIA’s revised assumptions about the marginal cost of moving crude oil via pipeline from Cushing, Oklahoma, to the Gulf Coast.
  • U.S. regular gasoline retail prices averaged $2.74 gallon (gal) in July, up 2 cents/gal from June but 11 cents/gal lower than the average in July of last year. EIA expects that monthly average gasoline prices peaked for the year in May at an average of $2.86/gal and will fall to an average of $2.64/gal in September. EIA expects regular gasoline retail prices to average $2.62/gal in 2019 and $2.71/gal in 2020.
  • The Henry Hub natural gas spot price averaged $2.37/million British thermal units (MMBtu) in July, down 3 cents/MMBtu from June. However, by the end of the month, spot prices had fallen below $2.30/MMBtu. Based on this price movement and EIA’s forecast of continued strong growth in natural gas production, EIA lowered its Henry Hub spot price forecast for the second half of 2019 to an average of $2.36/MMBtu. In the July STEO, EIA expected prices to average $2.50/MMBtu during this period. EIA expects natural gas prices in 2020 will increase to an average of $2.75/MMBtu. EIA’s natural gas production models indicate that rising prices are required in the coming quarters to bring supply into balance with rising domestic and export demand in 2020.
  • EIA has expanded its forecasts for electricity supply in the United States and has introduced new forecasts for wholesale electricity prices. A STEO Supplement provides more information about the changes.
  • Lower costs for natural gas drive EIA’s forecast that annual average wholesale electricity prices will be lower in 2019 than last year in all areas of the United States. The forecast year-over-year declines range from -0.2% in the Southwest Power Pool (SPP) to -28% in the Electric Reliability Council of Texas (ERCOT) market.
West Texas Intermediate (WTI) crude oil price
U.S. gasoline and crude oil prices
U.S. diesel fuel and crude oil prices
U.S. natural gas prices
Henry Hub natural gas price
U.S. residential electricity price

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Forecast Highlights – Short-Term Energy Outlook 08-06

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of August 6, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Forecast Highlights

Global liquid fuels

  • Brent crude oil spot prices averaged $64 per barrel (b) in July, almost unchanged from the average in June 2019 but $10/b lower than the price in July of last year. EIA forecasts Brent spot prices will average $64/b in the second half of 2019 and $65/b in 2020. The forecast of stable crude oil prices is the result of EIA’s expectations of a relatively balanced global oil market. EIA forecasts global oil inventories will increase by 0.1 million barrels per day (b/d) in 2019 and 0.3 million b/d in 2020.
  • EIA expects West Texas Intermediate (WTI) crude oil prices will average $5.50/b less than Brent prices during the fourth quarter of 2019 and in 2020, narrowing from the $6.60/b spread during July. The narrowing spread reflects EIA’s assumption that crude oil pipeline transportation constraints from the Permian Basin to refineries and export terminals on the U.S. Gulf Coast will ease in the coming months. In the July STEO, EIA forecast the Brent-WTI spread to average $4.00/b in 2020. The updated differential forecast reflects EIA’s revised assumptions about the marginal cost of moving crude oil via pipeline from Cushing, Oklahoma, to the Gulf Coast.
  • EIA estimates that U.S. crude oil production averaged 11.7 million b/d in July, down by 0.3 million b/d from the June level. The declines were mostly in the Federal Gulf of Mexico (GOM), where operators shut platforms for several days in mid-July because of Hurricane Barry. EIA estimates that GOM crude oil production fell by more than 0.3 million b/d in July. Those declines were partially offset by the Lower 48 States onshore region, which is mostly tight oil production, where supply rose by more than 0.1 million b/d. EIA expects monthly growth in Lower 48 onshore production to slow during the rest of the forecast period, averaging 50,000 b/d per month from the fourth quarter of 2019 through the end of 2020, down from an average of 110,000 b/d per month from August 2018 through July 2019. EIA forecasts U.S. crude oil production will average 12.3 million b/d in 2019 and 13.3 million b/d in 2020, both of which would be record levels.
  • U.S. regular gasoline retail prices averaged $2.74 gallon (gal) in July, up 2 cents/gal from June but 11 cents/gal lower than the average in July of last year. EIA expects that monthly average gasoline prices peaked for the year in May at an average of $2.86/gal and will fall to an average of $2.64/gal in September. EIA expects regular gasoline retail prices to average $2.62/gal in 2019 and $2.71/gal in 2020.

Natural gas

  • The Henry Hub natural gas spot price averaged $2.37/million British thermal units (MMBtu) in July, down 3 cents/MMBtu from June. However, by the end of the month, spot prices had fallen below $2.30/MMBtu. Based on this price movement and EIA’s forecast of continued strong growth in natural gas production, EIA lowered its Henry Hub spot price forecast for the second half of 2019 to an average of $2.36/MMBtu. In the July STEO, EIA expected prices to average $2.50/MMBtu during this period. EIA expects natural gas prices in 2020 will increase to an average of $2.75/MMBtu. EIA’s natural gas production models indicate that rising prices are required in the coming quarters to bring supply into balance with rising domestic and export demand in 2020.
  • EIA forecasts that U.S. dry natural gas production will average 91.0 billion cubic feet per day (Bcf/d) in 2019, up 7.6 Bcf/d from 2018. EIA expects monthly average natural gas production to grow in late 2019 and then decline slightly during the first quarter of 2020 as the lagged effect of low prices in the second half of 2019 reduces natural gas-directed drilling. However, EIA forecasts that growth will resume in the second quarter of 2020, and natural gas production in 2020 will average 92.5 Bcf/d.
  • EIA estimates that natural gas inventories ended July at 2.7 trillion cubic feet (Tcf), 13% higher than levels from a year earlier and 4% lower than the five-year (2014–18) average. EIA forecasts that natural gas storage injections during the 2019 April-through-October injection season will outpace the previous five-year average and that inventories will rise to more than 3.7 Tcf at the end of October, which would be 16% higher than October 2018 levels and slightly above to the five-year average.

Electricity, coal, renewables, and emissions

  • EIA has expanded its forecasts for electricity supply in the United States and has introduced new forecasts for wholesale electricity prices. A STEO Supplement provides more information about the changes.
  • Lower costs for natural gas drive EIA’s forecast that annual average wholesale electricity prices will be lower in 2019 than last year in all areas of the United States. The forecast year-over-year declines range from -0.2% in the Southwest Power Pool (SPP) to -28% in the Electric Reliability Council of Texas (ERCOT) market.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants will rise from 34% in 2018 to 37% in 2019 and then decline slightly in 2020. EIA forecasts that the share of U.S. generation from coal will average 24% in 2019 and in 2020, down from 28% in 2018. The forecast nuclear share of U.S. generation remains at about 20% in 2019 and in 2020. Hydropower averages a 7% share of total U.S. generation in the forecast for 2019 and 2020, similar to 2018. Wind, solar, and other non-hydropower renewables together provided 10% of U.S. total utility-scale generation in 2018. EIA expects they will provide 10% in 2019 and 12% in 2020.
  • EIA expects electric power sector demand for coal to fall by 2% in 2020, compared with an expected decline of 15% in 2019. However, planned coal plant retirements will continue to put downward pressure on overall electricity demand for the fuel. Almost 13 gigawatts of coal-fired electricity generation capacity has retired this year or is scheduled to retire by the end of 2020, accounting for 5% of the capacity existing at the end of 2018.
  • EIA forecasts that renewable fuels, including wind, solar, and hydropower, will collectively produce 18% of U.S. electricity in 2019 and 19% in 2020. EIA expects that annual generation from wind will surpass hydropower generation for the first time in 2019 to become the leading source of renewable electricity generation and maintain that position in 2020.
  • EIA is improving its regional-level trend analysis by inserting a generator-level production cost model that simulates hourly generation at individual power plants. This improves our insight into generation, especially from fast-growing renewable sources like wind and solar.
  • This additional granularity and the assumption that wind will return to more normal levels in 2019, after a windy first half of 2018, results in an EIA forecast that electricity generation from wind power will average 295 billion kilowatt-hours (kWh) in 2019 and 335 billion kWh in 2020, estimates that are 4% and 7% lower, respectively, than forecast in the July STEO. In addition, the application of hourly dispatch that better models solar incidence lowers the solar electric production forecast by 1.1% in 2019 and by 2.8% in 2020.
  • EIA forecasts that, after rising by 2.7% in 2018, U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.3% in 2019 and by 0.5% in 2020. In 2019, EIA forecasts that space cooling demand (as measured in cooling degree days) will be lower than in 2018, when it was 13% higher than the previous 10-year (2008–17) average. In addition, in 2019, EIA expects U.S. CO2 emissions to decline because the forecast share of electricity generated from natural gas and renewables is increasing while the forecast share generated from coal, which is a more carbon-intensive energy source, is decreasing. EIA’s projected emissions decline is lower in 2020 than in 2019 because it forecasts that both heating and cooling requirements will be slightly lower than normal. At the same time, the forecast coal share of generation will remain about the same as in 2019 while the natural gas share declines. Although EIA forecasts that generation from renewables will continue to increase in 2020, a forecast decrease in nuclear power offsets 24% of the renewables’ gain.

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Natural Gas, Short-Term Energy Outlook 06-19

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of June 11, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Natural Gas

Prices: The front-month natural gas futures contract for delivery at the Henry Hub settled at $2.32/million British thermal units (MMBtu) on June 6, a decrease of 30 cents/MMBtu from May 1 (Figure 9). EIA estimates that U.S. natural gas production reached another record high in May. This persistent production growth contributed to injections of more than 100 billion cubic feet (Bcf) for five of the past six weeks, bringing U.S. working gas in underground storage levels closer to the five-year (2014–18) average, 9% higher than year-ago levels. Combined net injections into storage during April and May, in 2019, are estimated to be the largest on record for that two-month period at 831 Bcf (Figure 10), which helped to reduce futures prices even though inventories remain lower than the five-year average.

Figure 9: U.S. natural gas front-month futures and storage
Figure 10: April and May combined net change in U.S. working gas inventory

Money manager positions: The number of futures short positions money managers reported holding for NYMEX natural gas contracts rose above long positions on May 21, 2019, for the first time since December 26, 2017 (Figure 11). The money manager category of the Commitments of Tradersreport, published weekly by the Commodity Futures Trading Commission, include fund managers that conduct organized futures trading on behalf of clients, and they are not involved in physical oil trading as their business activity. A short position indicates expectations of lower prices while a long position indicates the opposite. On November 13, 2018, money managers’ net long positions reached a record high. Natural gas prices increased sharply in mid-November after colder-than-normal weather reduced natural gas inventories to about 700 Bcf lower than the five-year average. In April and May 2019, however, ongoing increases in natural gas production contributed to record injections into natural gas storage, which, combined with forecasts of below-normal temperatures for June, have lowered price expectations. The natural gas front-month futures price on June 6 of $2.32/MMBtu was the lowest since May 2016.

Figure 11: MOney managers open interest in natural gas futures contracts

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Petroleum Products, Short-Term Energy Outlook 06-19

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of June 11, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) settled at $1.71 per gallon (gal) on June 6, down 36 cents/gal since May 1 (Figure 5). The RBOB–Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) declined by 11 cents/gal to settle at 24 cents/gal during the same period.

After increasing in April, the gasoline crack spread again dropped lower than the five-year (2014–18) range in May, averaging 4 cents below the previous five-year low of 35 cents for that month in 2018. Factors contributing to the smaller crack spread could include gasoline stock builds and gasoline consumption that were lower than year-ago levels. EIA estimates that U.S. gasoline consumption averaged 9.39 million barrels per day (b/d) in May, a decrease of 0.16 million b/d from the same period last year. Gasoline stocks increased during the month, ending close to the five-year average after ending April 6% lower than year-ago levels.

Flooding in the Midwest reduced refinery operations in Oklahoma and limited crude oil and product deliveries to the region’s refineries, preventing crude and product movement from the Gulf Coast to the Midwest and contributing to regional disparities in U.S. gasoline stock levels. In addition, refinery issues on the West Coast normalized mid-month, contributing to a stock build in that area. EIA estimates gasoline stocks ended May 4% higher than the five-year average on the Gulf Coast and 6% higher than the five-year average on the West Coast, while gasoline stocks in the Midwest were 7% lower than the five-year average.

Figure 5: Historical RBOB front-month futures prices and crack spread

Gasoline spot price differentials: In contrast to the United States, gasoline prices increased in Northwest Europe in May (Figure 6). Refinery shutdowns in the region, combined with the contamination of crude oil import pipelines from Russia, contributed to reduced refinery runs and gasoline production in Europe. Northwest Europe’s gasoline–Brent spot crack spread rose higher than the five-year low for the first time in 6 months and higher than the five-year average for the first time in 17 months. On May 20, these factors contributed to the lowest Gulf Coast gasoline spot price relative to Northwest Europe since November 2015. On May 31, they contributed to the lowest New York Harbor gasoline spot price relative to Northwest Europe since August 2011.

Figure 6: Gasoline spot price differentials

Ultra-low sulfur diesel prices: The ultra-low sulfur diesel (ULSD) front-month futures price decreased 31 cents/gal from May 1 to settle at $1.79/gal on June 6. The ULSD–Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) declined 6 cents/gal to settle at 32 cents/gal during the same period (Figure 7).

EIA estimates that U.S. distillate consumption in May was 3.9 million b/d, 380,000 b/d lower than in May 2018 and 40,000 b/d lower than the five-year average. However, some of the available transportation data are mixed. The truck tonnage data from the American Trucking Association for April (most recent available) show a 7.7% year-over-year increase, whereas the April 2019 Cass Freight Index report—reflecting the volume of freight shipments via all modes of domestic freight transportation, including rail, truck, and air—shows a 3.2% contraction for the month. Despite these and other economic indicators reflecting a potential slowdown in growth, EIA estimates distillate consumption will return to year-over-year growth through the third quarter of 2019. EIA’s forecast is based on the expectation of a 2.7% growth in U.S. GDP in 2019, indicating future growth in overall diesel demand.

Figure 7: Historical ULSD front-month futures price and crack spread

U.S. Gulf Coast refinery margins: The recent increase in medium and heavy crude oil prices that peaked in November 2018 reversed somewhat in March, April, and the first half of May 2019, before increasing again in late May. Reductions in crude oil production from Venezuela are likely increasing the price of medium and heavy crude oils compared with light crude oils. The 5:3:2 crack spread—refining three barrels of gasoline and two barrels of distillate from five barrels of Mars crude oil, which exemplifies a complex U.S. Gulf Coast refinery margin—averaged $13.94 per barrel (b) in May, after reaching a 2019 high of $16.95/b (40 cents/gal) on April 10 (Figure 8). Comparatively stable distillate crack spreads have supported total refinery margins. Although U.S. Gulf Coast gasoline crack spreads have remained positive since February, weaker crack spreads in May put downward pressure on margins from the April highs.

Figure 8: U.S. Gulf Coast refinery margins, five-day moving average

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Crude Oil, Short-Term Energy Outlook 06-19

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of June 11, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Crude Oil

Prices: The front-month futures price for Brent crude oil settled at $61.67 per barrel (b) on June 6, 2019, a decrease of $10.51/b from May 1. The front-month futures price for West Texas Intermediate (WTI) crude oil for delivery at Cushing, Oklahoma, decreased by $11.01/b during the same period, settling at $52.59/b on June 6 (Figure 1).

Figure 1: Crude oil front-month futures prices

Crude oil price volatility increased in May after declining for four consecutive months and stayed at elevated levels into the first week of June. Demand-side concerns became the most salient issue during the past month and contributed to volatility and price declines for risk assets such as commodities and equities. Both China and the United States issued tariffs on each other, with the United States also announcing potential tariffs on Mexico near the end of May. In addition, expected industrial activity, as measured by the manufacturing Purchasing Managers’ Index (PMI), declined across several countries in May, and the U.S. manufacturing PMI fell to its lowest level since 2009. These developments are contributing to concerns that economic growth could be lower than market participants’ expectations, which would cause oil demand growth to also be lower than expected.

Declining crude oil production in Venezuela and Iran, as well as Saudi Arabian over-compliance with December 2018 Vienna agreement production cuts, pushed crude oil production among members of the Organization of the Petroleum Exporting Countries (OPEC) to 29.9 million barrels per day (b/d) in May, the lowest for any month since July 2014. In addition, production shut-ins in Russia related to contamination of the Druzhba crude oil pipeline have emerged, and the market effect of these reductions has been compounded by planned maintenance on crude oil production platforms in the North Sea, where crude oil grades are in many cases substitutable for the disrupted Russian barrels.

A weakening outlook for demand at the same time near-term oil supplies are disrupted has lowered spot prices of crude oil while increasing futures price backwardation (when near-term prices are higher than longer-dated ones). Despite the recent demand uncertainties, EIA still expects a need for inventory withdrawals to meet demand given its forecast of near-term global crude oil production. EIA forecasts that global oil inventory withdrawals in the second and third quarters of 2019 will average 0.2 million b/d and 0.6 million b/d, respectively. EIA estimates that, as of the end of May, crude oil and other petroleum inventories in the Organization for Economic Cooperation and Development (OECD) were enough to cover 61 days of demand, only 1% lower than the five-year (2014–18) average (Figure 2). EIA expects that inventory withdrawals in the coming months will reduce the days of coverage further.

Figure 2: Days of supply difference to five-year average and Brent 13-1 spread

EIA is reducing its 2019 Brent crude oil price forecast to $67/b, which is $3/b lower than in the May STEO. The lower 2019 price forecast largely reflects recent global crude oil price declines as well as the uncertainty about global oil demand growth. EIA expects global oil demand to grow by 1.2 million b/d in 2019, 0.2 million b/d lower than the May forecast. EIA’s forecast for 2019 non-OECD oil-weighted GDP growth, based on forecasts from Oxford Economics, is 2.7%, which would be the lowest growth since 2009 and the second-lowest growth on record in a data set going back to 1994. However, EIA expects that crude oil prices will increase from current levels by the end of the year. EIA forecasts that Brent prices will average $68/b in the fourth quarter of 2019 as a result of inventory withdrawals during the summer, lower OPEC crude oil production than previously forecasted, and the expected increase in demand for light sweet crude oil ahead of the implementation of low sulfur bunker fuel regulations in January 2020. EIA expects that prices will remain near that level in 2020 based on EIA’s forecast of relatively balanced global oil markets next year.

Crude oil price spreads: Notwithstanding the decline in overall price levels in May, several factors specific to Brent and WTI are widening the Brent–WTI futures price spread. The Brent–WTI futures price spread settled at $8.94/b on June 6, an increase of 45 cents/b since May 1 (Figure 3). In late April, flows on parts of the Druzhba pipeline, which supplies Russian Urals crude oil to Europe, were suspended because of contamination of the crude oil. This disruption limited availability of Urals for several refiners in Europe that are regular purchasers of the crude oil grade. By early June, some Druzhba pipeline flows had been restored, but other refineries were still waiting for the contaminated crude oil to be removed from the pipeline so that flows of uncontaminated crude oil could resume. The contaminated crude oil will have to be stored for several months and gradually blended with clean crude oil to dilute the contaminants so the oil can be refined. Certain North Sea crude oil streams can substitute for Urals, which likely contributed to some relative upward price pressure for Brent in May. In addition, planned maintenance at some North Sea fields is expected to reduce available deliveries for June, which may have also put upward price pressure on Brent prices relative to other crude oils.

In contrast, Cushing WTI prices declined more than Brent prices in May because of logistical problems in the U.S. Midwest. Floods in the Midwest contributed to the temporary closure of several pipelines out of Cushing that provide feedstock to certain refiners. This disruption likely contributed to crude oil stocks in Cushing building by 4.8 million barrels from the first week in May to the last week in May, a month in which Cushing stocks typically draw by 2.1 million barrels, based on the five-year average stock change. Outside of the logistical issues in Cushing, U.S. commercial crude oil inventories increased in May. Total U.S. crude oil inventories increased by 15.7 million barrels in May, according to STEO estimates for the month, compared with a five-year average draw of 2.1 million barrels. If confirmed in monthly data, this year’s stock build would be the largest for the month of May since 1991.

Figure 3: Brent-WTI futures price spread

Emerging market currencies: Some of the demand-side concerns affecting crude oil markets could also be reducing the value of emerging market currencies compared with the U.S. dollar. The Morgan Stanley Capital International (MSCI) Emerging Market Currency Index tracks a basket of emerging market currencies that declined 1% from May 1 through June 6 (Figure 4). A lower value of the index indicates emerging market currencies are depreciating against the U.S. dollar. The recent decline in the MSCI Emerging Market Currency index could indicate a reduction in economic activity in countries such as China or South Korea, countries with relatively high weightings in the index. The Chinese manufacturing PMI for May declined to 49.4. Any reading lower than 50 indicates a contraction in manufacturing activity. In addition, total South Korean exports of all goods declined 9.4% from May 2018 to May 2019, the sixth consecutive month of year-over-year declines.

Figure 4: Crude oil and Emerging Markets Currency Index

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Notable Forecast Changes, Short-Term Energy Outlook 06-19

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of June 11, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Notable Forecast Changes

  • EIA forecasts Brent crude oil prices will average $67 per barrel (b) in 2019, down about $3/b from last month’s STEO forecast. The lower 2019 price forecast largely reflects recent price declines in global crude oil prices, which lowered the starting point for EIA’s forecast, and uncertainty about global oil demand growth. Forecast global liquid fuels supply and consumption were both lowered by about 0.2-0.3 million barrels per day (b/d) for 2019 and for 2020. The lower global supply growth forecast is mostly the result of lower crude oil production growth in the United States because of lower expected oil prices and an expectation of increasing crude oil production declines in Venezuela. The reduction in global demand growth reflects both a revision to historical data that carries through to the forecast and lower oil consumption growth in 2019 because of reduction in forecast 2019 oil-weighted GDP growth among countries not part of the Organization for Economic Cooperation and Development (OECD).

Real Prices Viewer

Real Petroleum Prices are computed by dividing the nominal price in a given month by the ratio of the Consumer Price Index (CPI) in that month to the CPI in some “base” period. The Real Petroleum Prices spreadsheet and charts are updated every month so that the current month is the base period in the monthly price series. Consequently, all real prices are expressed in “current” dollars and any current month price may be compared directly with any past or projected real prices.

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions, Short-Term Energy Outlook 06-19

Onyx Power and Gas Consulting continues with its weekly series providing the Short-Term Energy Outlook as of June 11, 2019.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions

Recent Economic Indicators.

  • EIA used the May 2019 version of the IHS Markit macroeconomic model with EIA’s energy price forecasts as model inputs to develop the economic forecasts in STEO. Using the IHS Markit model, EIA forecasts real GDP to grow by 2.7% in 2019 and by 2.2% in 2020, compared with 2.9% growth in 2018.

Energy-Related Carbon Dioxide Emissions.

  • After rising by 2.7% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.0% in 2019 and by 0.9% in 2020. EIA expects U.S. CO2 emissions will fall in 2019 and in 2020 because its forecast assumes that temperatures will return to near normal, and because the forecast share of electricity generated from natural gas and renewables increases while the forecast share generated from coal, which produces more CO2 emissions, decreases. Energy-related CO2 emissions are sensitive to weather, economic growth, energy prices, and fuel mix.
U.S. carbon dioxide emissions growth

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in Clean Energy, CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Green Energy, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 8 Comments