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Last Updated: December 28, 2018
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Market Watch

Headline crude prices for the week beginning 17 December 2018 – Brent: US$50/b; WTI: US$42/b

  • It hasn’t been a Merry Christmas for oil prices, as both international benchmarks slid down to lows for the year, with Brent prices dropping below US$50/b at one point as international financial markets descended into chaos
  • OPEC’s attempt to support prices via a new supply deal became merely a blip in a sea of red, as the market shrugged off the deal to focus on a softening global economy and surging American oil production
  • The US Federal Reserve’s decision to hike interest rates – and the subsequent Twitter tantrum by US President Donald Trump – spooked markets, resulting in a Christmas Eve selloff that rattled stock exchanges globally
  • Saudi Arabia has tried to re-assure the market that the OPEC+ club would continue to trim production, asserting confidence that the review due in April will see extended cuts and appealing to the market that ‘we need more time to achieve the (intended) results’
  • Perhaps as a sign of confidence, Saudi Arabia estimates that it will produce 10.2 mmb/d of crude in 2019, with prices expected at US$80/b; Russia’s Energy Minister Alexander Novak also attempted to reassure the market, stating that the producers will react if the situation changes
  • Counter to the market direction, American drillers added 10 new oil rigs – almost all onshore – to service, with the active rig count expected to be up by some 150 rigs year-on-year
  • Crude price outlook: After the panic sell-off, a rebound is likely, as the market realigns itself. Longer-term concerns over a supply glut are still looming, but Brent should be able to claw back some ground to US$52-54/b and WTI to US$44-46/b

Headlines of the week


  • China’s CNOOC has signed strategic cooperation agreements with 9 international oil majors – including Shell, Chevron, Total and Equinor – aimed at boosting production in the Pearl River Mouth Basin offshore area
  • South Sudan has announced that it has secured at least US$2 billion in oil investments, including funds from the South African government, Petronas and Oranto Petroleum, with more expected in 2019
  • Total is set to begin crude exports from the offshore Egina field in Nigeria, with an initial 100,000 b/d joining the market in February, possibly doubling after
  • The Canadian federal government has offered some US$1.1 billion in loans for the oil and gas sector, aimed at supporting the beleaguered industry in Alberta, but the package was criticised as ‘insufficient’ by the state premier
  • After agreeing on the Platina field development, Sonangol and BP have agreed to extend the production licence for the Greater Plutonio field in Angola’s offshore Block 18 to 2032, with Sonangol taking an 8% stake in the block
  • Total and Petrobras have agreed to another MoU, this one covering joint development of the Lapa field in Brazil – with Total acquiring an additional 10% stake, up to 45% – as well as onshore solar and wind projects
  • Mexico’s new President is boosting Pemex’s budget to US$23 billion next year - US$10.4 billion for upstream and the remainder for downstream – in a bid to reverse the country’s flagging oil production and slash fuel imports; Pemex’s new upstream budget is mainly aimed at shallow water and onshore fields
  • A record 100 crude tankers were scrapped this year by ship owners, as the industry consolidates after the worst average shipping rates in three decades


  • After vacillating between an imploding PDVSA and a failed courtship with a Chinese firm, the government of Curacao has reported chosen Motiva – Saudi Aramco’s American refining arm – to operate the island’s 335 kb/d Isla refinery
  • Saudi Arabia and India’s Reliance have agreed to explore joint ventures focusing on refining and petrochemical operations in both countries
  • Croatia’s INA has announced plans to invest some US$616 million to upgrade its largest refinery in Rijeka and convert the Sisak refinery into a fuel plant
  • Sudan has reportedly signed an agreement with a consortium of Russian firms to build a 222 kb/d refinery in Port Sudan, with access to the Red Sea

Natural Gas/LNG

  • BP and its partners Kosmos Energy, Petrosen and SMHPM have sanctioned FID for Phase 1 of the Greater Tortiue Ahmeyim development in offshore Mauritania and Senegal – an innovative deepwater gas project involving an FPSO/FLNG combo with capacity for 2.5 mtpa of LNG 
  • Sempara Energy subsidiary Port Arthur LNG and Poland’s PGNiG have signed a 20-year agreement which will see 2 mtpa of LNG exported from the liquefaction facility currently under development in Jefferson County, Texas
  • Production at Equinor’s Aasta Hansteen field in the Norwegian Sea has begun, with recoverable reserves estimated at 353 million boe


  • Shell is in preliminary negotiations to purchase American oil producer Endeavor Energy for US$8 billion, roughly half of the company’s self-valuation, with the prize of undeveloped land in the Permian up for grabs

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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