EIA expects Brent crude oil prices to average $73 per barrel in the second half of 2018, then fall to $69 per barrel in 2019
In the July 2018 update of its Short–Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that Brent crude oil prices will average $73 per barrel (b) in the second half of 2018 and $69/b in 2019. EIA expects West Texas Intermediate (WTI) crude oil prices will average $7/b lower than Brent prices in the second half of 2018 and $7/b lower in 2019 (Figure 1).
EIA’s forecast of global liquid fuels balances indicates a looser oil market in the second half of 2018 and through the end of 2019 compared with the tight oil market conditions that prevailed in 2017 and the first half of 2018. Although global petroleum and other liquid fuels inventories declined by an average of 0.5 million barrels per day (b/d) in 2017, EIA expects inventories to be relatively unchanged in 2018 and to increase by 0.6 million b/d in 2019 (Figure 2).
The forecast inventory builds in 2019 are mainly the result of expected liquid fuels production growth in the United States, Brazil, Canada, and Russia. EIA forecasts that these countries will collectively provide 2.2 million b/d out of the 2.4 million b/d of total global supply growth in 2019. Supply growth of this magnitude would outpace EIA’s forecast for global liquid fuels consumption growth of 1.7 million b/d for 2019.
EIA forecasts total U.S. crude oil production to average 10.8 million b/d in 2018, up 1.4 million b/d from 2017, and 11.8 million b/d in 2019. If realized, the forecast level for both years would surpass the previous U.S. record of 9.6 million b/d set in 1970. Crude oil production at these forecast levels would probably make the United States the world’s leading crude oil producer in both years.
Increased production from tight rock formations within the Permian region in Texas and New Mexico accounts for 0.6 million b/d of the expected 1.2 million b/d of crude oil production growth from June 2018 to December 2019. The remaining increase comes from the Bakken, Eagle Ford, other regions in the Lower 48 states, and the Federal Offshore Gulf of Mexico.
However, OECD inventory levels that have fallen below the five-year (2013–17) average and a forecast of low spare capacity among members of the Organization of the Petroleum Exporting Countries (OPEC) create conditions for possible price increases if additional supply disruptions occur or if forecast supply growth does not materialize (Figure 3). EIA expects OPEC surplus production capacity to average 1.7 million b/d in 2018 and to fall to 1.3 million b/d in 2019, a relatively low level compared with the 2008–17 average of 2.3 million b/d. Low OPEC crude oil surplus production capacity can be an indicator of tight oil market conditions. All of OPEC’s currently available surplus production capacity is in Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar.
EIA forecasts OPEC crude oil production to average 31.9 million b/d in 2018, a decrease of 0.6 million b/d compared with the 2017 level. The forecast decline is mainly the result of Venezuela’s rapidly decreasing crude oil production, which fell to less than 1.4 million b/d as of June 2018, a 0.6 million b/d decrease compared with June 2017. OPEC output during the first half of 2018 was also lower as a result of the production caps placed on the group’s producers as agreed upon in the November 2016 OPEC production agreement that aimed to limit OPEC crude oil output to 32.5 million b/d.
OPEC crude oil production averaged 31.9 million b/d in June. Although the OPEC and non-OPEC participants agreed on November 30, 2017, to extend the production cuts through the end of 2018 to reduce global oil inventories, tightening market conditions led the group to relax the production cuts starting in July 2018. EIA expects that OPEC crude oil output will decrease by an average of less than 0.1 million b/d in 2019. This small decline reflects crude oil production increases from some producers that would mostly offset expected combined declines of more than 1.0 million b/d in Iran and Venezuela.
U.S. average regular gasoline and diesel prices increase
The U.S. average regular gasoline retail price increased one cent from the previous week to $2.86 per gallon on July 9, up 56 cents from the same time last year. The Midwest and Gulf Coast prices each increased nearly two cents to $2.78 per gallon and $2.62 per gallon, respectively, the East Coast price increased one cent to $2.78 per gallon, and the West Coast price rose slightly, remaining virtually unchanged at $3.39 per gallon. The Rocky Mountain price decreased marginally, remaining virtually unchanged at $2.96 per gallon.
The U.S. average diesel fuel price increased less than a cent, remaining at $3.24 per gallon on July 9, up 76 cents from a year ago. The Rocky Mountain and East Coast prices each increased over a penny to $3.37 per gallon and $3.24 per gallon, respectively, the Midwest price rose nearly one cent to $3.18 per gallon, and the West Coast and Gulf Coast prices each rose slightly, remaining virtually unchanged at $3.75 per gallon and $3.00 per gallon, respectively.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 2.4 million barrels last week to 63.6 million barrels as of July 6, 2018, 6.4 million barrels (9.2%) lower than the five-year average inventory level for this same time of year. Gulf Coast and Midwest inventories each increased by 1.2 million barrels and Rocky Mountain/West Coast inventories increased by 0.2 million barrels, while East Coast inventories decreased by 0.2 million barrels. Propylene non-fuel-use inventories represented 3.7% of total propane/propylene inventories.
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The global oilfield scale inhibitor market was valued at USD 509.4 Million in 2014 and is expected to witness a CAGR of 5.40% between 2015 and 2020. Factors driving the market of oilfield scale inhibitor include increasing demand from the oil and gas industry, wide availability of scale inhibitors, rising demand for biodegradable and environment-compatible scale inhibitors, and so on.
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The oilfield scale inhibitor market is experiencing strong growth and is mainly driven by regions, such as RoW, North America, Asia-Pacific, and Europe. Considerable amount of investments are made by different market players to serve the end-user applications of scale inhibitors. The global market is segmented into major geographic regions, such as North America, Europe, Asia-Pacific, and Rest of the World (RoW). The market has also been segmented on the basis of type. On the basis of type of scale inhibitors, the market is sub-divided into phosphonates, carboxylate/acrylate, sulfonates, and others.
Carboxylate/acrylic are the most common type of oilfield scale inhibitor
Among the various types of scale inhibitors, the carboxylate/acrylate type holds the largest share in the oilfield scale inhibitor market. This large share is attributed to the increasing usage of this type of scale inhibitors compared to the other types. Carboxylate/acrylate meets the legislation requirement, abiding environmental norms due to the absence of phosphorus. Carboxylate/acrylate scale inhibitors are used in artificial cooling water systems, heat exchangers, and boilers.
RoW, which includes the Middle-East, Africa, and South America, is the most dominant region in the global oilfield scale inhibitor market
The RoW oilfield scale inhibitor market accounted for the largest share of the global oilfield scale inhibitor market, in terms of value, in 2014. This dominance is expected to continue till 2020 due to increased oil and gas activities in this region. The Middle-East, Africa, and South America have abundant proven oil and gas reserves, which will enable the rapid growth of the oilfield scale inhibitor market in these regions. Among the regions in RoW, Africa’s oilfield scale inhibitor market has the highest prospect for growth. Africa has a huge amount of proven oil reserves and is one of the leading oil producing region in the World. But political unrest coupled with lack of proper infrastructures may negatively affect oil and gas activities in this region.
Major players in this market are The Dow Chemical Company (U.S.), BASF SE (Germany), AkzoNobel Oilfield (The Netherlands), Kemira OYJ (Finland), Solvay S.A. (Belgium), Halliburton Company (U.S.), Schlumberger Limited (U.S.), Baker Hughes Incorporated (U.S.), Clariant AG (Switzerland), E. I. du Pont de Nemours and Company (U.S.), Evonik Industries AG (Germany), GE Power & Water Process Technologies (U.S.), Ashland Inc. (U.S.), and Innospec Inc. (U.S.).
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Headline crude prices for the week beginning 9 December 2019 – Brent: US$64/b; WTI: US$59/b
Headlines of the week
In the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2019 (IEO2019), India has the fastest-growing rate of energy consumption globally through 2050. By 2050, EIA projects in the IEO2019 Reference case that India will consume more energy than the United States by the mid-2040s, and its consumption will remain second only to China through 2050. EIA explored three alternative outcomes for India’s energy consumption in an Issue in Focus article released today and a corresponding webinar held at 9:00 a.m. Eastern Standard Time.
Long-term energy consumption projections in India are uncertain because of its rapid rate of change magnified by the size of its economy. The Issue in Focus article explores two aspects of uncertainty regarding India’s future energy consumption: economic composition by sector and industrial sector energy intensity. When these assumptions vary, it significantly increases estimates of future energy consumption.
In the IEO2019 Reference case, EIA projects the economy of India to surpass the economies of the European countries that are part of the Organization for Economic Cooperation and Development (OECD) and the United States by the late 2030s to become the second-largest economy in the world, behind only China. In EIA’s analysis, gross domestic product values for countries and regions are expressed in purchasing power parity terms.
The IEO2019 Reference case shows India’s gross domestic product (GDP) growing from $9 trillion in 2018 to $49 trillion in 2050, an average growth rate of more than 5% per year, which is higher than the global average annual growth rate of 3% in the IEO2019 Reference case.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
India’s economic growth will continue to drive India’s growing energy consumption. In the IEO2019 Reference case, India’s total energy consumption increases from 35 quadrillion British thermal units (Btu) in 2018 to 120 quadrillion Btu in 2050, growing from a 6% share of the world total to 13%. However, annually, the level of GDP in India has a lower energy consumption than some other countries and regions.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
In the Issue in Focus, three alternative cases explore different assumptions that affect India’s projected energy consumption:
EIA’s analysis shows that the country's industrial activity has a greater effect on India’s energy consumption than technological improvements. In the IEO2019 Composition and Combination cases, where the assumption is that economic growth is more concentrated in manufacturing, energy use in India grows at a greater rate because those industries have higher energy intensities.
In the IEO2019 Combination case, India’s industrial energy consumption grows to 38 quadrillion Btu more in 2050 than in the Reference case. This difference is equal to a more than 4% increase in 2050 global energy use.