Higher production, lower diesel prices forecasted by EIA
January 12, 2022
The Energy Information Administration updated its short-term energy outlook with a Jan. 11 news release, which now includes data for 2023.
Notable within that 2023 data is the expectation for U.S. crude oil production to increase to 12.4 million barrels per day, according to EIA. That would be the highest production for any year on record, said Timothy Hess, EIA’s project manager for short-term energy outlook.
Looking at current pricing, the EIA is forecasting a decline in diesel prices by spring 2022.
“Although we expect diesel prices will decline from the current level, we expect diesel prices will be higher on average than last year,” Hess said. “In our most recent survey, U.S. average diesel prices started the year at $3.66 per gallon. We expect prices will fall to about $3.30 per gallon by April and stay near that level most of the summer.”
That predicted decline is based on EIA’s expectation of falling crude oil prices.
“We expect Brent crude oil prices, which are currently above $80 per barrel, to fall to $75 per barrel over the summer,” Hess said. “However, that forecast depends on oil supply and demand developments. Notably, the amount of oil OPEC produces as well as how oil consumption behavior changes as the pandemic evolves.”
In addition to changes in consumption, the oft-discussed supply chain issues also factor in.
“Global supply chain disruptions have also likely exacerbated inflationary price effects across all sectors in recent months,” Hess said. “How central banks respond to inflation may affect economic growth and oil demand in the next two years.”
With 2023 still a ways off, what about the more near future?
Based upon the EIA forecast and expectations, diesel prices are predicted to average $3.27 per gallon this year, said Hess.
Find the full EIA short-term energy outlook here. LL