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Total liquid fuels inventories return to five-year average levels in the United States and the OECD


The extended period of oversupply in global petroleum markets that began before the Organization of the Petroleum Exporting Countries (OPEC) November 2016 agreement to cut production has ended, and the large buildup of global inventories during that period has now been drawn down. As OPEC plans to reconvene on June 22, markets now appear more in balance, but uncertainty remains going forward.


The November 2016 OPEC supply agreement took effect in January 2017, whereby OPEC member countries agreed to reduce crude oil production by 1.2 million barrels per day (b/d) compared with October 2016 levels and to limit total OPEC production to 32.5 million b/d. In addition, Russia agreed to reduce its crude oil production. OPEC extended the agreement in November 2017, with the production cuts remaining in place until the end of 2018.


Since January 2017, one of the primary indicators of a tightening world oil market has been a decline in crude oil and other liquids inventories. After sustained increases in quarterly global liquid inventories from mid-2014 through most of 2016, inventories declined throughout 2017 and into the first quarter of 2018 (Figure 1).

Figure 1. World liquids fuels production and consumption balance


Data for global petroleum inventories are not collected directly. Instead, increases or decreases in global inventories are implied based on the difference between world production and world consumption estimates. However, inventory data for the United States and for countries within the Organization for Economic Cooperation and Development (OECD) are available and can indicate what is happening globally.


From January 2017 to April 2018, U.S. crude oil and other liquids inventories decreased by 162 million barrels while OECD inventories decreased by 234 million barrels. Over this same period, U.S. and OECD crude oil and other liquids inventories moved from 229 million barrels and 334 million barrels, respectively, higher than their five-year averages to 16 million barrels and 2 million barrels lower (Figure 2).

Figure 2. Commercial crude oil and other liquids inventory versus five-year average

Between the first quarter of 2017 and the first quarter of 2018, estimated total world petroleum and other liquids production rose 1.6 million b/d. OECD petroleum and other liquids production rose 1.3 million b/d, and most of this growth came from increased crude oil production in the United States, which increased by 1.2 million b/d, from 9.0 million b/d to 10.2 million b/d. Total OPEC petroleum (crude and other liquids) production increased by 0.4 million b/d over this period. Total OPEC crude oil production remained lower than the 32.5 million b/d agreement level, increasing 0.27 million b/d to 32.4 million b/d.


Total world petroleum and other liquids consumption, on the other hand, increased by an estimated 1.9 million b/d between the first quarters of 2017 and 2018, exceeding the growth in production and resulting in inventory declines. This consumption growth occurred primarily in the United States (0.6 million b/d), China (0.5 million b/d), and other Non-OECD Asia (0.6 million b/d) (Figure 3).

Figure 3. Change in world petroleum production and consumption Q1 2017 to Q1 2018


The days of supply measure (current inventory level divided by next month’s estimated consumption) provides additional insight into market balances. Between January 2017 and April 2017, U.S. and OECD crude oil days of supply fell by 11.5 and 4.5 days, respectively, to 59.2 and 60.6 days. U.S. crude oil and other liquids days of supply fell from 12 days higher than the five-year average to 3.6 days lower. OECD crude oil and other liquids days of supply dropped from 7.4 days higher than the five-year average to 1.6 days lower (Figure 4).

Figure 4. U.S. and OECD crude oil and other liquids days of supply versus five-year average


EIA forecasts that the tightening trend in global petroleum markets will reverse. In the May 2018 Short-Term Energy Outlook, EIA forecasts that both U.S. and OECD petroleum and other liquids inventories will return to surpluses compared with their five-year averages, although on a smaller scale compared with the period between 2015 and 2016. U.S. and OECD days of supply are forecast to remain in a band that is close to the five-year average level through 2019. However, additional uncertainty about future global oil market balances remains in light of, among other factors, the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and the continued instability in Venezuela.


U.S. average diesel price increases


The U.S. average regular gasoline retail price for May 14, 2018 was $2.87 per gallon. Please note that on May 14, 2018, EIA implemented new statistical methodologies for conducting the Motor Gasoline Price Survey. Because of these changes, the published price estimates this week are not directly comparable with those published for May 7, 2018, which were based on EIA’s previous sample.

The U.S. average diesel fuel price increased nearly 7 cents to $3.24 per gallon on May 14, 2018, nearly 70 cents higher than a year ago. Midwest prices rose over eight cents to almost $3.18 per gallon, West Coast and Rocky Mountain prices each rose nearly seven cents to $3.73 per gallon and $3.32 per gallon, respectively, and East Coast and Gulf Coast prices each rose nearly six cents to $3.24 per gallon and $3.01 per gallon, respectively.


Propane/propylene inventories rise


U.S. propane/propylene stocks increased by 1.7 million barrels last week to 40.4 million barrels as of May 11, 2018, 12.3 million barrels (23.4%) lower than the five-year average inventory level for this same time of year. Midwest, East Coast, and Gulf Coast inventories increased by 0.8 million barrels, 0.6 million barrels, and 0.4 million barrels, respectively, while Rocky Mountain/West Coast inventories decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 7.2% of total propane/propylene inventories.


For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.

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The United States consumed a record amount of renewable energy in 2019

In 2019, consumption of renewable energy in the United States grew for the fourth year in a row, reaching a record 11.5 quadrillion British thermal units (Btu), or 11% of total U.S. energy consumption. The U.S. Energy Information Administration’s (EIA) new U.S. renewable energy consumption by source and sector chart published in the Monthly Energy Review shows how much renewable energy by source is consumed in each sector.

In its Monthly Energy Review, EIA converts sources of energy to common units of heat, called British thermal units (Btu), to compare different types of energy that are more commonly measured in units that are not directly comparable, such as gallons of biofuels compared with kilowatthours of wind energy. EIA uses a fossil fuel equivalence to calculate primary energy consumption of noncombustible renewables such as wind, hydro, solar, and geothermal.

U.S. renewable energy consumption by sector

Source: U.S. Energy Information Administration, Monthly Energy Review

Wind energy in the United States is almost exclusively used by wind-powered turbines to generate electricity in the electric power sector, and it accounted for about 24% of U.S. renewable energy consumption in 2019. Wind surpassed hydroelectricity to become the most-consumed source of renewable energy on an annual basis in 2019.

Wood and waste energy, including wood, wood pellets, and biomass waste from landfills, accounted for about 24% of U.S. renewable energy use in 2019. Industrial, commercial, and electric power facilities use wood and waste as fuel to generate electricity, to produce heat, and to manufacture goods. About 2% of U.S. households used wood as their primary source of heat in 2019.

Hydroelectric power is almost exclusively used by water-powered turbines to generate electricity in the electric power sector and accounted for about 22% of U.S. renewable energy consumption in 2019. U.S. hydropower consumption has remained relatively consistent since the 1960s, but it fluctuates with seasonal rainfall and drought conditions.

Biofuels, including fuel ethanol, biodiesel, and other renewable fuels, accounted for about 20% of U.S. renewable energy consumption in 2019. Biofuels usually are blended with petroleum-based motor gasoline and diesel and are consumed as liquid fuels in automobiles. Industrial consumption of biofuels accounts for about 36% of U.S. biofuel energy consumption.

Solar energy, consumed to generate electricity or directly as heat, accounted for about 9% of U.S. renewable energy consumption in 2019 and had the largest percentage growth among renewable sources in 2019. Solar photovoltaic (PV) cells, including rooftop panels, and solar thermal power plants use sunlight to generate electricity. Some residential and commercial buildings heat with solar heating systems.

October, 20 2020
Natural gas generators make up largest share of U.S. electricity generation capacity

operating natural-gas fired electric generating capacity by online year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Based on the U.S. Energy Information Administration's (EIA) annual survey of electric generators, natural gas-fired generators accounted for 43% of operating U.S. electricity generating capacity in 2019. These natural gas-fired generators provided 39% of electricity generation in 2019, more than any other source. Most of the natural gas-fired capacity added in recent decades uses combined-cycle technology, which surpassed coal-fired generators in 2018 to become the technology with the most electricity generating capacity in the United States.

Technological improvements have led to improved efficiency of natural gas generators since the mid-1980s, when combined-cycle plants began replacing older, less efficient steam turbines. For steam turbines, boilers combust fuel to generate steam that drives a turbine to generate electricity. Combustion turbines use a fuel-air mixture to spin a gas turbine. Combined-cycle units, as their name implies, combine these technologies: a fuel-air mixture spins gas turbines to generate electricity, and the excess heat from the gas turbine is used to generate steam for a steam turbine that generates additional electricity.

Combined-cycle generators generally operate for extended periods; combustion turbines and steam turbines are typically only used at times of peak load. Relatively few steam turbines have been installed since the late 1970s, and many steam turbines have been retired in recent years.

natural gas-fired electric gnerating capacity by retirement year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Not only are combined-cycle systems more efficient than steam or combustion turbines alone, the combined-cycle systems installed more recently are more efficient than the combined-cycle units installed more than a decade ago. These changes in efficiency have reduced the amount of natural gas needed to produce the same amount of electricity. Combined-cycle generators consume 80% of the natural gas used to generate electric power but provide 85% of total natural gas-fired electricity.

operating natural gas-fired electric generating capacity in selected states

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Every U.S. state, except Vermont and Hawaii, has at least one utility-scale natural gas electric power plant. Texas, Florida, and California—the three states with the most electricity consumption in 2019—each have more than 35 gigawatts of natural gas-fired capacity. In many states, the majority of this capacity is combined-cycle technology, but 44% of New York’s natural gas capacity is steam turbines and 67% of Illinois’s natural gas capacity is combustion turbines.

October, 19 2020
EIA’s International Energy Outlook analyzes electricity markets in India, Africa, and Asia

Countries that are not members of the Organization for Economic Cooperation and Development (OECD) in Asia, including China and India, and in Africa are home to more than two-thirds of the world population. These regions accounted for 44% of primary energy consumed by the electric sector in 2019, and the U.S. Energy Information Administration (EIA) projected they will reach 56% by 2050 in the Reference case in the International Energy Outlook 2019 (IEO2019). Changes in these economies significantly affect global energy markets.

Today, EIA is releasing its International Energy Outlook 2020 (IEO2020), which analyzes generating technology, fuel price, and infrastructure uncertainty in the electricity markets of Africa, Asia, and India. A related webcast presentation will begin this morning at 9:00 a.m. Eastern Time from the Center for Strategic and International Studies.

global energy consumption for power generation

Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)

IEO2020 focuses on the electricity sector, which consumes a growing share of the world’s primary energy. The makeup of the electricity sector is changing rapidly. The use of cost-efficient wind and solar technologies is increasing, and, in many regions of the world, use of lower-cost liquefied natural gas is also increasing. In IEO2019, EIA projected renewables to rise from about 20% of total energy consumed for electricity generation in 2010 to the largest single energy source by 2050.

The following are some key findings of IEO2020:

  • As energy use grows in Asia, some cases indicate more than 50% of electricity could be generated from renewables by 2050.
    IEO2020 features cases that consider differing natural gas prices and renewable energy capital costs in Asia, showing how these costs could shift the fuel mix for generating electricity in the region either further toward fossil fuels or toward renewables.
  • Africa could meet its electricity growth needs in different ways depending on whether development comes as an expansion of the central grid or as off-grid systems.
    Falling costs for solar photovoltaic installations and increased use of off-grid distribution systems have opened up technology options for the development of electricity infrastructure in Africa. Africa’s power generation mix could shift away from current coal-fired and natural gas-fired technologies used in the existing central grid toward off-grid resources, including extensive use of non-hydroelectric renewable generation sources.
  • Transmission infrastructure affects options available to change the future fuel mix for electricity generation in India.
    IEO2020 cases demonstrate the ways that electricity grid interconnections influence fuel choices for electricity generation in India. In cases where India relies more on a unified grid that can transmit electricity across regions, the share of renewables significantly increases and the share of coal decreases between 2019 and 2050. More limited movement of electricity favors existing in-region generation, which is mostly fossil fuels.

IEO2020 builds on the Reference case presented in IEO2019. The models, economic assumptions, and input oil prices from the IEO2019 Reference case largely remained unchanged, but EIA adjusted specific elements or assumptions to explore areas of uncertainty such as the rapid growth of renewable energy.

Because IEO2020 is based on the IEO2019 modeling platform and because it focuses on long-term electricity market dynamics, it does not include the impacts of COVID-19 and related mitigation efforts. The Annual Energy Outlook 2021 (AEO2021) and IEO2021 will both feature analyses of the impact of COVID-19 mitigation efforts on energy markets.

Asia infographic, as described in the article text


Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)
Note: Click to enlarge.

With the IEO2020 release, EIA is publishing new Plain Language documentation of EIA’s World Energy Projection System (WEPS), the modeling system that EIA uses to produce IEO projections. EIA’s new Handbook of Energy Modeling Methods includes sections on most WEPS components, and EIA will release more sections in the coming months.

October, 16 2020