trending Market Intelligence /marketintelligence/en/news-insights/trending/a-nwlLURiFm5gB0UIGDnmw2 content esgSubNav
In This List

EIA cuts crude oil price outlook through 2020 on signs of slowing manufacturing

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


EIA cuts crude oil price outlook through 2020 on signs of slowing manufacturing

The U.S. Energy Information Administration lowered its crude oil price outlook through 2020 citing manufacturing indicators that may point to slowing global economic growth.

In its latest "Short-Term Energy Outlook," the EIA projected West Texas Intermediate spot crude oil prices to decline from an average $65.06 per barrel in 2018 to $56.31/bbl in 2019 before climbing to $56.50/bbl in 2020. The 2019 projection is down 2.7% from the prior forecast, while the 2020 projection is down 5.0%.

In 2018, Brent crude oil averaged $71.19/bbl. The EIA expects the global benchmark price to decline to $63.39/bbl in 2019, down 2.7% from the prior forecast, before sliding to $62.00/bbl in 2020, down 4.6% from the prior forecast.

"Global economic indicators continue to decline, contributing to oil price declines and volatility," the EIA said, noting that manufacturing purchasing managers' indexes, or PMIs, which at times are leading indicators of economic growth, showed a contraction in manufacturing activity in "several countries in August." The EIA said PMIs were mixed for the U.S., with the IHS Markit PMI showing a slight expansion, albeit at the lowest level since September 2009, and that of the U.S. Institute for Supply Management showing a contraction for the first time since 2016.

Meanwhile, U.S.-China trade tensions continue to weigh on crude oil markets. A 5% tariff on U.S. crude oil imports that China announced on Aug. 23 led to a 2% decline in WTI crude oil prices the same day, the EIA said.

The EIA said U.S. crude oil production averaged a record 10.99 million barrels per day in 2018 as December 2018 production reached 11.96 million bbl/d, the highest level in U.S. history. The EIA forecasts U.S. crude oil production will average 12.24 million bbl/d in 2019 and 13.23 million bbl/d in 2020, with most of the growth coming from the Permian Basin.

During 2018, West Texas Intermediate traded at an average $6.13/bbl discount to Brent. The government expects the average discount to widen to $7.08/bbl in 2019 before narrowing to $5.50/bbl in 2020.