Many of us have the end of the year and the end of the decade on our minds: wrapping up projects, working to close deals and matters, and striving to end the year on as high of a note as we possibly can. It is hard to believe but there are only 15 days left in 2019.
With the end of the year at the forefront, it puts many things into perspective. The U.S. Energy Information Administration (“EIA”) recently released its December 2019 Short-Term Energy Outlook (“STEO”) which can be found here. With 2019 coming to a close, we look to forecasting 2020.
STEO Forecast Highlights – By way of a summary, here are the highlights of the December 2019 STEO:
- Slower Increase in Oil Production: The EIA is expecting slowing crude oil production growth in 2020, but growth in U.S. crude oil production is expected to increase over 2019 production. The EIA is predicting the following: “Slowing crude oil production growth results from a decline in drilling rigs over the past year that EIA expects to continue into 2020. Despite the decline in rigs, EIA forecasts production will continue to grow as rig efficiency and well-level productivity rises, offsetting the decline in the number of rigs.”
- Lower Oil Prices: The EIA is expecting that “crude prices will be lower on average in 2020 than in 2019 because of forecast rising global oil inventories, particularly in the first half of the year.”
- Continuing OPEC Production Limits: The “EIA assumes that OPEC will limit production through all of 2020. . . .” The new production target is reportedly “1.7 million barrels per day (b/d) lower than in October 2018, compared with the former target reduction of 1.2 million b/d.”
- By way of a reminder, the Organization of the Petroleum Exporting Countries (“OPEC”) met last week and approved additional adjustments to the previous production cuts – more on this can be found here.
- Increase in Crude Oil and Petroleum Exports: The “EIA expects total crude oil and petroleum net exports to average 570,000 b/d in 2020 compared with average net imports of 490,000 b/d in 2019.”
These new outlooks for 2020 leave us with a hopeful anticipation overall as we close out the year. Only time will tell if they are accurate forecasts!