Oil & Gas Forecasts From EIA STEO

[dan_s]

EIA Short-Term Energy Outlook, released 1/6/2018.

Comments from John White at Roth Capital:

The EIA estimates that U.S. crude oil production averaged 10.2 million b/d in January, up 100,000 b/d from the December level. The EIA estimates that total U.S. crude oil production averaged 9.3 million b/d in 2017 and will average 10.6 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. The EIA forecasts that 2019 crude oil production will average 11.2 million b/d.

The EIA estimates that U.S. dry natural gas production averaged 73.6 Bcf/d in 2017. The EIA forecasts that natural gas production will reach 80.3 Bcf/d in 2018, establishing a new record. That level would be 6.7 Bcf/d higher than the 2017 level, and the forecast 2017 growth would be the highest annual average growth on record. The EIA expects natural gas production will also increase in 2019, with forecast growth of 2.6 Bcf/d.

In January, the U.S. benchmark Henry Hub natural gas spot price averaged $3.88 per million British thermal units (MMBtu), up $1.06/MMBtu from December. Cold temperatures east of the Rocky Mountains in early January contributed to high levels of natural gas consumption as well as a reduction in production because of well freeze-offs. This combination resulted in record-high natural gas inventory withdrawals in mid-January, which contributed to rising prices.

The EIA expects natural gas prices to moderate in the coming months, based on a forecast of record growth in natural gas production. The EIA expects Henry Hub spot prices to average $3.34/MMBtu in February and $3.20/MMBtu for all of 2018. In 2019, the EIA forecasts prices will average $3.08/MMBtu.

The EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 32% in 2017 to 33% in 2018 and to 34% in 2019. The forecast generation share from coal in 2018 averages 30%, about the same as in 2017, but then falls to 29% in 2019. The nuclear share of generation was 20% in 2017 and is forecast to average 20% in 2018 and 19% in 2019. Non-hydropower renewables provided slightly less than 10% of electricity generation in 2017 and is expected to provide about 10% in both 2018 and 2019. The generation share of hydropower was almost 8% in 2017 and is forecast to be about 7% in both 2018 and 2019.

On 1/9/2018, Reuters reported that, bit by bit, the U.S. petroleum industry is turning world oil markets inside out. U.S. oil shipments to China have surged, creating trade between the world's two biggest powers that until 2016 just did not exist, and helping Washington in its effort to reduce the nation's huge trade deficit with China. When U.S. oil exports appeared in 2016, the first cargoes went to free trade agreement partners South Korea and Japan. Few expected China to become a major buyer. Data in Thomson Reuters Eikon shows U.S. crude shipments to China went from nothing before 2016 to a record 400,000 b/d in January, worth almost $1 billion.

[dan_s]

https://www.investing.com/analysis/elli ... -200289445