Mainly, EIA foresees that US basic retail gas price will follow changes to the cost of crude oil, decreasing from an average of $2.73/gallon in 2018 to $2.47/gallon in 2019, before rising to $2.62/gallon in 2020.

Because each barrel of crude oil holds 42 gallons, a $1/barrel change in the price of crude oil generally translates to about a 2.4% /gallon change in the price of petroleum products such as gasoline.

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Also, EIA estimates that global petroleum and other liquid fuels inventories rose by an average rate of 0.4 million b/d in 2018 and by an estimated 1.0 million b/d in the Q4 of 2018.

EIA predicts growth in liquid fuels production in the US and in other countries not part of the Organization of the Petroleum Exporting Countries (OPEC) will contribute to global oil inventory growth rates of 0.2 million b/d in 2019 and 0.4 million b/d in 2020.

Credit: US EIA

Despite the fact that oil prices will remain lower than during most of 2018, the forecast includes some increase in prices from December 2018 levels in early 2019 in order to keep up with demand growth and support the increased need for global oil inventories to maintain five-year average levels of demand cover.

Moreover, EIA expects crude oil prices to rise in the end of 2019, and early 2020 as an increase in refinery demand for light-sweet crude oil, which is the result of regulations from the IMO that will limit the sulphur content in marine fuels used by ocean-going vessels.

EIA expects global oil production growth in 2019 to be led by countries that are not part of OPEC, particularly the United States.

EIA expects non-OPEC producers will increase oil supply by 2.4 million b/d in 2019 which will offset forecast supply declines from OPEC members, resulting in an average of 1.4 million b/d in total global supply growth in 2019.

In 2020, EIA expects oil production to rise by 1.7 million b/d because of production growth in the United States, Canada, Brazil, and Russia, while overall OPEC crude oil production is expected to remain flat. EIA forecasts global oil demand to grow by 1.5 million b/d in 2019 and in 2020. In both 2019 and 2020, China is the leading contributor to global oil demand growth.