As EIA informs, despite relatively lower supply from various major crude oil-producing countries, including Saudi Arabia, Libya, Venezuela, and Canada, global liquid fuels production will surpass global consumption through 2020.
Specifically, EIA forecasts that Brent crude oil prices will average $61 per barrel (b) in 2019 and $62/b in 2020. In addition, EIA expects a higher US crude oil production and slightly lower global oil consumption, which will offset the short-term supply reductions. Thus, global petroleum liquids stocks will increase and prices will remain relatively flat.
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The reduction in oil production from OPEC countries and Canada are probably contributing to rising prices of medium and heavy crude oils compared with light crude oils. These countries produce medium and heavy grades of crude oil with higher sulphur content, so a large share of the global oil supply reductions in January has been of this quality. U
Moreover, despite a relative tightening of heavy crude oil supply, EIA does not believe that any significant decrease will take place in US refinery runs. US imports of Venezuelan crude oil have been falling for many years, and refineries have been replacing Venezuelan crude oil with other heavy crude oils. Refineries may also opt to run lighter crude oils if transportation constraints limit the availability of heavy crude oils.
The February STEO forecast for US crude oil production was revised higher by about 340,000 b/d in both 2019 and 2020 compared with the January STEO, mainly because of increased production in the US Gulf of Mexico and the Permian Region. Production data in the Gulf of Mexico for November 2018 was higher than previously forecast and achieved a record high production level of 1.9 million b/d.
Furthermore, crude oil production from the Permian Region of western Texas and eastern New Mexico was revised up in the February STEO based on higher than expected production and a tightening of the price spread between Midland, Texas, and Cushing, Oklahoma.
Finally, is spite of positive economic data from the US, EIA’s forecast for global oil-weighted GDP growth was revised down slightly from the January STEO. This revision led to a slight downward revision in the global oil consumption forecast. Due to these changes to global supply and demand, EIA expects global petroleum stocks to increase through 2019 and 2020.
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