Global Liquid Fuels Production to Rise in 2024, Oil Prices Surge, U.S. Gasoline Consumption Drops

US diesel and crude oil prices EIA forecast in November

In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) predicts a notable increase in global liquid fuels production for the upcoming year.

According to the report, production is expected to rise by 1.0 million barrels per day in 2024. This surge is attributed to expectations that OPEC+ production cuts will remain in place until the end of 2024, effectively countering non-OPEC production growth. Furthermore, the EIA anticipates a slight decline in global oil inventories during early 2024.

One of the most significant takeaways from the STEO is the projection of Brent crude oil prices averaging around $93 per barrel in 2024, marking an increase of over $9 per barrel compared to the current year. These price increases are driven by several factors, including escalating risks of supply disruptions and price volatility in light of potential conflicts spreading throughout the Middle East.

Additionally, the EIA’s forecast indicates that U.S. motorists are set to consume less gasoline per capita in 2024. This trend is expected to result in the lowest gasoline consumption in the United States in two decades. According to EIA Administrator Joe DeCarolis, this decline is attributed to a combination of factors, including reduced daily commuting, increased efficiency in newer gasoline-fueled vehicles, and the growing presence of electric vehicles on the road. High gasoline prices and inflationary pressures are further contributing to this reduction in gasoline consumption.

Other key highlights from the November STEO report include:

Coal Markets: The report reveals that record coal demand from Europe and Asia is driving U.S. coal exports to return to pre-pandemic levels. However, U.S. coal production is anticipated to decrease in 2024 as the domestic electric power sector continues to shift towards generating more power from renewable resources, such as solar and wind, instead of coal.

Electricity Consumption: U.S. electricity consumption is projected to increase in the coming year, with the most substantial rise expected in the residential sector. Factors contributing to this growth include colder winter conditions and warmer summer temperatures in 2024 compared to 2023. Electricity consumption is also forecasted to increase in the commercial and industrial sectors.

In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) has provided several key insights into the global energy landscape:

Global Oil Supply: The EIA forecasts that global liquid fuels production will increase by 1.0 million barrels per day (b/d) in 2024. This growth is expected to be balanced by ongoing OPEC+ production cuts, which will offset the production increases from non-OPEC countries. As a result, the global oil market is expected to remain relatively balanced in the coming year.

Brent Crude Oil Price: The EIA anticipates that the price of Brent crude oil will rise from an average of $90 per barrel (b) in the fourth quarter of 2023 to an average of $93/b in 2024. This projection reflects ongoing dynamics in the oil market.

U.S. Gasoline Consumption: In the EIA’s forecast, U.S. gasoline consumption is expected to decline by 1 percent in 2024. This reduction would mark the lowest per capita gasoline consumption in two decades. Factors contributing to this decline include an increase in remote work arrangements, improvements in the fuel efficiency of the U.S. vehicle fleet, high gasoline prices, and persistent inflation.

Natural Gas Inventories: The EIA estimates that U.S. natural gas inventories reached 3,835 billion cubic feet (Bcf) at the end of October, representing a 6 percent surplus compared to the five-year average (2018-2022). The EIA also predicts that natural gas inventories will be 21 percent above the five-year average by the end of the winter heating season (November-March), with nearly 2,000 Bcf in storage. This surplus is attributed to increased natural gas production and milder winter weather conditions, reducing the demand for space heating in commercial and residential sectors. The Henry Hub spot price is projected to average around $3.20 per million British thermal units (MMBtu) in November, a decrease from the previous year’s price of approximately $5.50/MMBtu.

Coal Markets: U.S. coal exports have rebounded to pre-pandemic levels, driven by robust global coal demand, particularly in Europe and Asia. The EIA anticipates that coal exports will reach 97 million short tons (MMst) in 2023, with increases in both steam and metallurgical coal exports. Steam coal exports are projected to rise by 6 MMst to reach 45 MMst in 2023, while metallurgical coal exports are expected to increase by 6 MMst to reach 52 MMst during the same period. However, U.S. coal production is forecasted to decline by more than 100 MMst in 2024 due to reduced demand from the electric power sector. This reduction in coal’s role in electricity generation will be compensated by an increase in electricity generation from renewable resources.

OPEC Production Capacity: Despite increasing OPEC spare production capacity in 2023 and 2024, the EIA has revised down its estimate of Iraq’s spare capacity by approximately 0.4 million b/d compared to the previous STEO. This revision is due to the removal of Iraq’s total production capacity assets in northern Iraq, which relied on the northern Iraq-to-Türkiye pipeline for global market access. The pipeline has been non-operational since March 2023, impacting Iraq’s production capacity.