Global liquid fuels

• The August Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty related to the ongoing recovery from the COVID-19 pandemic. U.S. economic activity continues to rise after reaching multiyear lows in the second quarter of 2020 (2Q20). U.S. gross domestic product (GDP) declined by 3.5% in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 6.6% in 2021 and by 5.0% in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit. The EIA’s forecast assumes continuing economic growth and increasing mobility. Any developments that would cause deviations from these assumptions would likely cause energy consumption and prices to deviate from their forecast.

• Brent crude oil spot prices averaged $75 per barrel (b) in July, up $2/b from June and up $25/b from the end of 2020. Brent prices have been rising this year as result of steady draws on global oil inventories. It averaged 1.8 million barrels per day (b/d) during the first half of 2021 (1H21). It remained at almost 1.4 million b/d in July. The EIA expects Brent prices will remain near current levels for the remainder of 2021. averaging $72/b from August through November. However, in 2022, the EIA expects that continuing growth in production from OPEC+ and accelerating growth in U.S. tight oil production—along with other supply growth—will outpace decelerating growth in global oil consumption and contribute to Brent prices declining to an average of $66/b in 2022.

• The EIA estimates that 98.8 million b/d of petroleum and liquid fuels were consumed globally in July. This is an increase of 6.0 million b/d from July 2020 but 3.4 million b/d less than in July 2019. They forecast that global consumption of petroleum and liquid fuels will average 97.6 million b/d for all of 2021. This is a 5.3 million b/d increase from 2020. The EIA forecasts that global consumption of petroleum and liquid fuels will increase by 3.6 million b/d in 2022 to average 101.2 million b/d.

• U.S. gasoline consumption averaged 8.6 million b/d in 1H21. It is up from 8.3 million b/d in 2H20 but below the 9.3 million b/d in 2H19. The EIA’s latest estimates show that gasoline consumption in May through July was higher than previously expected. Growth in employment and increasing mobility have led to rising gasoline consumption so far in 2021. In this STEO, forecast U.S. gasoline consumption averages 8.8 million b/d in 2021, up from 8.0 million b/d in 2020. The EIA expects the trend of rising employment and mobility to continue into next year. As a result, the EIA forecasts gasoline consumption to average almost 9.0 million b/d in 2022. However, their assumption that a relatively high share of the workforce will continue working from home next year compared with before the pandemic keeps the forecasted gasoline consumption below the 2019 level of 9.3 million b/d.

• U.S. regular gasoline retail prices averaged $3.14 per gallon (gal) in July. This is the highest monthly average price since October 2014. Recent gasoline price increases reflect rising crude oil prices and rising wholesale gasoline margins, amid relatively low gasoline inventories. The EIA expects that prices will average $3.12/gal in August before falling to $2.82/gal, on average, in 4Q21. The expected drop in retail gasoline prices reflects our forecast that gasoline margins will decline from elevated levels. This is typical in the United States during the second half of the year.

• The EIA forecasts OPEC crude oil production will average 26.5 million b/d in 2021, up from 25.6 million b/d in 2020. OPEC crude oil production in the forecast rises from 25.0 million b/d in April to an average of 27.1 million b/d in 3Q21. Our expectation of rising OPEC production is primarily based on our assumption that OPEC will raise production through the end of 2021 in line with targets it announced on July 18. We expect OPEC crude oil production will rise to an average of 28.7 million b/d in 2022.

• EIA’s most recent monthly data show U.S. crude oil production was 11.2 million b/d in May. We expect production to be relatively flat through October before it starts rising in November and December and throughout 2022. Forecast U.S. crude oil production for 2022 averages 11.8 million b/d, up from 11.1 million b/d in 2021.