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The United States will return to being a net importer of crude oil and petroleum products in the third quarter of 2020 and remain a net importer in most months through the end of 2021.
That’s what the U.S. Energy Information Administration (EIA) forecasts in its latest short-term energy outlook (STEO), which was released on Tuesday.
“This is a result of higher net imports of crude oil and lower net exports of petroleum products. Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export,” the report stated.
“On the petroleum product side, net exports will be lowest in the third quarter of 2020, when U.S. refinery runs are expected to decline significantly,” the report added.
The EIA projects that U.S. crude oil production will average 11.8 million barrels per day this year, which marks a 0.5 million barrel per day decrease from 2019 and the first annual decline since 2016. In 2021, the EIA expects U.S. crude production to decline by another 0.7 million barrels per day.
“Typically, price changes impact production after about a six-month lag. However, current market conditions, combined with the Covid-19 pandemic, will likely reduce this lag as many producers have already announced plans to reduce capital spending and drilling levels,” the EIA stated in the report.
In its latest STEO, the EIA forecasts that Brent crude oil prices will average $33 per barrel this year, which is $10 per barrel lower than last month’s STEO projected. The organization expects prices will average $23 per barrel during the second quarter of 2020 before increasing to $30 per barrel during the second half of the year.
Average Brent prices are forecasted to rise to an average of $46 per barrel in 2021, “as a return to declining global oil inventories puts upward pressure on prices”.
The EIA’s latest STEO assumes that there will be no OPEC+ deal during the forecast period.
“Despite recent news of OPEC+ emergency meetings within the next few days to discuss production levels, without an agreement actually in place, EIA assumes no re-implementation of an OPEC+ agreement during the forecast period,” the EIA stated in the report.
“If there is ultimately an agreement, this forecast will incorporate that information into its ensuing release,” the report added.
