EIA Expects Increased US Crude Oil Production
US crude oil output will average 11.9 million barrels per day this year and 12.8 million barrels per day in 2023, breaking the record of 12.3 million barrels per day set in 2019, according to the US Energy Information Administration (EIA).
Despite increased output, the EIA predicts that the Brent crude oil price will remain above $100 per barrel this year.
The EIA recently released its annual Summer Electricity Industry Outlook; it predicts that ongoing US economic growth will boost electricity consumption by 0.4 percent this summer (June–August) compared to 2021. Retail sales of electricity to the industrial sector will increase by 2.8 percent. In comparison, retail sales to the commercial sector will increase by 1.5 percent.
This summer, solar and wind power will account for 11.1 percent of US electricity generation, up 9.6 percent in 2021. This summer, only solar and wind energy will expand their proportion of US electricity generation.
In the second half of 2022, the Henry Hub natural gas price will average $8.59 per million British thermal units, an 88 percent increase from 2021. This projection is a considerable change from prior forecasts; it owes it to the EIA updating its power generation modeling to better account for shifting coal market restrictions.
In 2022, US coal production will total 598 million short tons, a 3% increase over 2021. The STEO forecasted a 7% increase in domestic coal production last month.
EU Ban on Russian Oil
Oil rose over 10% on Wednesday after falling nearly 10% in the previous two days, boosted by supply fears as the European Union seeks to secure support for a ban on Russian oil. Major producers warned they might struggle to fill the gap when demand increases. Brent crude was up $2.35, or 2.41 percent, to $104.84 per barrel. Meanwhile, West Texas Intermediate crude was up $2.2, or 2.24 percent, to $101.97 per barrel.
This week, oil prices have fallen along with commodities and stock markets due to concerns about the economic impact of protracted COVID controls in China and steep interest rate hikes in the United States.
The EU has suggested a Russian oil embargo. Still, a vote, which requires unanimous backing, has been postponed since Hungary has remained staunchly opposed. Other European nations have expressed fear that their economy may suffer.
Japan to Seek Alternative Sources for Crude Oil
Although Russian oil constitutes a modest fraction of Japan’s crude oil imports, prices may rise further if other countries try to acquire alternate suppliers.
Following its decision to prohibit Russian crude imports in line with the other Group of Seven industrialized nations, Japan will explore other suppliers of crude oil.
Russian oil makes for only a minor fraction of Japan’s crude oil imports — 3.6 percent in 2021 — thus, the government determined that a ban on Russian oil imports would not cause considerable problems in terms of domestic consumption. However, if other countries try to secure alternate sources, crude oil prices may rise further.
According to government sources, the objective is to gradually reduce imports from Eastern Siberia; which accounts for almost half of Russian oil in Japan, and implements the embargo in phases.
Domestic oil merchants have been looking for alternative sources of crude since Russia commenced its invasion of Ukraine in February. Japan was the latest G7 country to announce its banning of Russian oil imports; the European Union, including France, Germany, Italy, the United States, Britain, and Canada already announced a ban on Russian oil. Crude oil prices have recently been maintained low by the likelihood that demand in China will fall due to Beijing’s zero-COVID policy lockdowns.
