Fuel market remains extremely volatile

The fallout from the conflict in Ukraine still factors heavily in the Energy Information Administration’s short-term energy outlook released on April 12.

The outlook cited energy supply uncertainty because of Russia’s invasion of Ukraine in addition to OPEC+ production decisions and increased drilling by U.S. producers.

An EIA statement on its April outlook said it will continue to monitor market dynamics in the energy sector and publish updated information to support a fuller understanding of the evolving situation.

As a supplement to its short-term outlook, the EIA has provided a Summer Fuels Outlook.

Crude oil

In March, the Brent crude oil spot price averaged $117 per barrel, according to the EIA outlook. This was an increase of $20 per barrel from February.

“Crude oil prices increased following the further invasion of Ukraine by Russia,” the EIA outlook said. “Sanctions on Russia and other actions contributed to falling oil production in Russia and created significant market uncertainties about the potential for further oil supply disruptions. These events occurred against a backdrop of low oil inventories and persistent upward oil price pressures.”

Even still, EIA is predicting the Brent price to average $108 per barrel in the second quarter of 2022, and $102 per barrel in the second half of 2022. By 2023, EIA expect the average to fall to $93 per barrel.

U.S. crude oil production is expected to average 12 million barrels per day in 2022, and increase to nearly 13 million barrels per day in 2023. This would break the annual average record of 12.3 million barrels per day set in 2019.

Diesel

So far, 2022 has been one of the most volatile years on record for the fuel market. On March 12, the highest retail price ($5.135) for a gallon of diesel was reported, according to AAA. The previous retail record was $4.845 set in July 2008.

However, the national average price per gallon of diesel has dropped in three of the last four weeks based upon the EIA’s weekly report.

Despite the recent relief, industry experts believe that trend may not continue in the near future.

EIA’s summer fuels outlook speaks directly to this with a predicted summer average of $4.57 per gallon of diesel. If so, this would be the highest inflation-adjusted summer price since 2014.

And they are not alone in this prediction.

Land Line will delve deeper into this fuel outlook in the coming days.

To read EIA’s full reports go to EIA.gov. LL