The U.S. Department of Energy believes the price of petroleum products will fall 5% to 10% this year – 2023 – from its previous predictions which was also a decline.
The Energy Information Administration forecast crude oil will average $77 per barrel in 2023, an $11 less than its previous prediction of $86. It said, Gasoline also was revised down from $3.51 to $3.32, and diesel at $4.20 down 16%. Gas “is expected to average $4.90 per million British thermal units, which is a 9.8% drop from its previous estimate of $5.43”.
The Administration based its new projections this week in its latest short-term energy outlook on expectations of a 0.5% growth in GDP, and an increase in petroleum supplies globally.
It said, “Relatively flat economic growth in 2023 results in total U.S. energy consumption falling by 0.9% in our forecast,”. It further “assumed global GDP growth—based on forecasts from Oxford Economics—will average 1.8% in 2023. “We forecast that global liquid fuels consumption will increase 1% in 2023 (1.0 million b/d),”. ”Petroleum consumption growth is driven by rising petroleum demand in China and India in both years (2023 and 2024).”
In its report, “EIA forecast global petroleum production will increase by 1% (1.1 million b/d) from 2022 to 2023”. Also that, “The United States and OPEC account for most of the increase in global production, offsetting production declines in Russia. We forecast that Russia’s petroleum production will fall from 10.9 million b/d in 2022 to 9.5 million b/d in 2023 as a result of sanctions related to Russia’s full-scale invasion of Ukraine. We forecast that U.S. production will grow by 5% (1.0 million b/d) in 2023, and OPEC liquid fuels production (which includes crude oil) will increase by 0.5% (160,000 b/d) in 2023.”
On Feb. 5, the European Union’s ban on seaborne imports of petroleum products from Russia becomes effective, which is expected to be more disruptive to global petroleum markets than the EU’s December 2022 ban on seaborne crude oil imports from same Russia.
EIA said oil production in the U.S. will reach historic highs in 2023 averaging 12.4 million barrels per day (b/d) and same can be traced rentier economies like Nigeria whos production have been on a steady rise.
In the US, Texas – the leading oil-producing state, projects an increase of 440,000 b/d in the Permian Basin this year. These projected increases are the major base with which the EIA built its projected shortfall.
This news hits differently as many producing states are optimistic on the reactivation of the economies of China and India mostly due to COVID -19.