In its December issue Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) forecasts global oil inventories to fall by 200,000 b/d in first-half 2023 before rising by almost 700,000 b/d in second-half 2023. This forecast leaves global oil inventories higher at the end of 2023 than the agency had forecast in the November STEO, which results in its Brent crude oil price forecast averaging $92/bbl in 2023, $3/bbl less than it had forecast last month.
US refinery utilization in EIA’s forecast remains near its 5-year average through 2023. EIA expects the combination of a slight contraction in the US economy and refinery maximization of distillate fuel production will reduce distillate prices in first-half 2023. US diesel refining margins is expected to fall by 19% in 2023 compared with 2022. However, the EU’s ban on seaborne imports of petroleum products from Russia creates supply and price uncertainty for distillate markets in early 2023. Carbide Round Burs
On the natural gas front, EIA forecasts natural gas prices to increase from November levels as a result of both higher winter natural gas demand and rising LNG exports. The forecast for the Henry Hub spot price averages more than $6/MMbtu in first-quarter 2023, up from November’s monthly average of about $5.50/MMbtu. EIA also expects natural gas prices to begin declining after January as US storage levels move closer to the previous 5-year average, largely because of rising US natural gas production. However, the possibility of price volatility remains high.
EIA also raised its forecast for US natural gas production by almost 1% in 2023 compared with last month’s forecast. Although EIA continues to expect natural gas production in the Permian basin to be limited early in 2023 by the lack of pipeline capacity to bring associated natural gas production to market, EIA believes that these constraints will be resolved earlier than it had previously assumed. This change also contributes to slightly more crude oil production in 2023 than it had previously forecast.
Ball Nose End Mill Freeport LNG announced its export terminal will resume partial operations exporting LNG in mid-December following an outage that began in June 2022. EIA expects Freeport LNG will ramp up utilization in the coming months and will reach full capacity by March 2023.