Global oil inventories expected to grow, prices to drop in next two years: EIA

Photo taken on March 12, 2019, shows operating oil pumps in Luling of Texas, the United States. (Xinhua/Wang Ying)

As for crude oil prices, the Brent crude oil price is forecast to average 83 U.S. dollars per barrel in 2023, down 18 percent from 2022, and continue to fall to 78 dollars per barrel in 2024 as global oil inventories build, putting downward pressure on crude oil prices.

HOUSTON, Jan. 10 (Xinhua) -- Global oil inventories will increase over the next two years with more global oil production than consumption, the U.S. Energy Information Administration (EIA) forecast on Tuesday.

Partly as the result, crude oil prices will further go down, the EIA said in its January Short-Term Energy Outlook (STEO) report.

The report forecast that global production of liquid fuels will reach an average of 102.8 million barrels per day (b/d) in 2024, up from 100 million b/d in 2022, driven by large growth in non-OPEC production.

However, uncertainty over Russia's oil supply will persist, particularly in early 2023, the report noted, expecting global consumption of liquid fuels will rise from an average of 99.4 million b/d in 2022 to 102.2 million b/d in 2024.

The EIA said that ongoing concerns about global economic conditions as well as the easing COVID-19 restrictions in China raised the uncertainty of the outcomes of its demand forecasts.

As for crude oil prices, the Brent crude oil price is forecast to average 83 U.S. dollars per barrel in 2023, down 18 percent from 2022, and continue to fall to 78 dollars per barrel in 2024 as global oil inventories build, putting downward pressure on crude oil prices.

Gasoline prices will also decline as both wholesale refining margins and crude oil prices fall, said the report, forecasting U.S. gasoline refining margins to fall by 29 percent in 2023 and by 14 percent in 2024, leading to retail gasoline prices averaging around 3.30 dollars per gallon in 2023 and 3.10 dollars per gallon in 2024.

A man pumps gasoline into his car at a gas station in Millbrae, California, the United States, May 16, 2022. (Photo by Li Jianguo/Xinhua)

U.S. refining margins for diesel are expected to fall by 20 percent in 2023 and by 38 percent in 2024. The EIA forecast retail diesel prices to average about 4.20 dollars per gallon in 2023, down 16 percent from 2022, and continue to fall in 2024, averaging near 3.70 dollars per gallon.

In the EIA forecast,the Henry Hub natural gas spot price averages slightly less than 5 dollars per million British thermal units (MMBtu) in 2023, down close to 25 percent from last year, as domestic consumption declines and liquefied natural gas (LNG) exports remain relatively flat.

In 2024, natural gas prices will again average slightly below 5 dollars per MMBtu, as dry natural gas production outpaces an increase in LNG exports that results from rising LNG export capacity.

The report expected U.S. natural gas production in both the Permian and Haynesville regions to grow with the completion of pipeline infrastructure expansions in 2023 and 2024.

The EIA also forecast that the share of U.S. electricity generation from coal will fall from 20 percent in 2022 to 18 percent in 2023 and 17 percent in 2024. As an offset, the share of combined utility-scale solar and wind generation will surge from 16 percent in 2023 to 18 percent in 2024.