While production, price and demand for natural gas and coal continue to slide, coronavirus concerns put a spotlight on another fuel in this month’s
“Short-Term Energy Outlook”: global oil.
“Markets for oil, as well as other commodities and equities, have experienced significant volatility and price declines since the final week in February amid concerns over the economic effects of the 2019 novel coronavirus disease,” said the Energy Information Administration in its report, released March 12. The agency had delayed its release of the report to include the steep drop in oil prices.
On March 9, Brent crude oil front-month futures prices fell below $35/barrel, a 24% daily decline and the second largest daily price decline on record, EIA said. The agency forecasts Brent crude oil prices will average $43/b in 2020, down from an average of $64/b in 2019.
But those low prices will likely be short-lived. “For 2020, EIA expects prices will average $37/b during the second quarter and then rise to $42/b during the second half of the year,” the report said.
Based on the lower crude oil forecast, motorists might be paying less than $2 for a gallon of regular gasoline. EIA expects U.S. retail prices for a gallon of regular gas to average $2.14 per gallon in 2020, down from $2.60 in 2019. EIA also expects retail gasoline prices to fall to a monthly average of $1.97 per gallon in April before rising to an average of $2.13 per gallon from June through August.
Turning to other fuels, the Henry Hub natural gas spot price averaged $1.91 per million British thermal units (MMBtu). “Warmer-than-normal temperatures in February reduced demand for space heating and put downward pressure on prices,” the agency said.
EIA forecasts that prices will begin to rise in the third quarter—to $2.22/MMBtu—"as natural gas production declines and natural gas use for power generation increases the demand for natural gas.”
And EIA forecasts that U.S. coal production will total 573 million short tons (MMst) in 2020, down 117 MMst (17%) from 2019. The agency also forecasts that electric power sector’s demand for coal will fall by 86 MMst (16%) in 2020.
“EIA expects that U.S. coal production will stabilize in 2021 as export demand rises and U.S. power sector demand for coal increases slightly because natural gas prices increase,” the report said.