SHORT-TERM ENERGY OUTLOOK Forecast overview This edition of STEO is the first to include forecasts for 2024 .
• U . S . GDP growth . Based on the S & P Global macroeconomic model , we expect U . S . real GDP to grow by 0.5 % in 2023 , with economic growth returning after contraction in the first quarter of 2023 ( 1Q23 ) and 2Q23 . In 2024 , real GDP grows by 1.9 %, driven primarily by an increase in household consumption . Relatively flat economic growth in 2023 results in total U . S . energy consumption falling by 0.9 % in our forecast . Total energy consumption then rises by 1.0 % in 2024 .
• Global liquid fuels markets . Global production of liquid fuels in our forecast reaches an average of 102.8 million barrels per day ( b / d ) in 2024 , up from 100.0 million b / d in 2022 , driven by large growth in non-OPEC production . However , uncertainty over Russia ’ s oil supply will persist , particularly in early 2023 . We expect that global consumption of liquid fuels will increase from an average of 99.4 million b / d in 2022 to 102.2 million b / d in 2024 . Ongoing concerns about global economic conditions as well as the easing COVID-19 restrictions in China , however , increase the uncertainty of the outcomes of our demand forecasts . With more global oil production than consumption in our forecast , we expect global oil inventories will increase over the next two years .
• Crude oil prices . We forecast that the Brent crude oil price will average $ 83 per barrel ( b ) in 2023 , down 18 % from 2022 , and continue to fall to $ 78 / b in 2024 as global oil inventories build , putting downward pressure on crude oil prices .
• Gasoline prices . Gasoline prices decline in our forecast as both wholesale refining margins and crude oil prices fall . We forecast U . S . gasoline refining margins will fall by 29 % in 2023 and fall by 14 % in 2024 , leading to retail gasoline prices averaging around $ 3.30 per gallon ( gal ) in 2023 and $ 3.10 / gal in 2024 .
• Diesel prices . We forecast that U . S . refining margins for diesel will fall by 20 % in 2023 and by 38 % in 2024 . We expect retail diesel prices to average about $ 4.20 / gal in 2023 , down 16 % from 2022 . In 2024 , we expect prices to continue to fall , and average near $ 3.70 / gal .
• Natural gas prices . The Henry Hub natural gas spot price averages slightly less than $ 5.00 per million British thermal units ( MMBtu ) in 2023 in our forecast — down close to 25 % from last year — as domestic consumption declines and liquefied natural gas ( LNG ) exports remain relatively flat . In 2024 , we expect natural gas prices to again average slightly below $ 5.00 / MMBtu , as dry natural gas production outpaces an increase in LNG exports that results from rising LNG export capacity .
• Natural gas production . We expect natural gas production in both the Permian and Haynesville regions to grow with the completion of pipeline infrastructure expansions in 2023 and 2024 .
• Electricity generation . We expect that the share of electricity generation from coal will fall from 20 % in 2022 to 18 % in 2023 and 17 % in 2024 . This decline will be partially offset by an increase in the forecast share of combined utility-scale solar and wind generation from 16 % in 2023 to 18 % in 2024 .
Release Date : Jan . 10 , 2023 ; U . S . Energy Information Administration .
STEO BETWEEN THE LINES : WHY OIL PRICES WILL FALL
EIA forecasts that oil prices will fall in 2023 and 2024 . We expect that Brent crude oil prices will average $ 83 per barrel ( b ) in 2023 and $ 78 / b in 2024 , down from $ 101 / b in 2022 , mainly because we expect global oil production to outpace consumption . However , three key factors — Russia ’ s oil production and ability to export petroleum products , several non-OPEC countries ’ ability to increase oil production , and China ’ s loosening of COVID-related restrictions — could meaningfully affect our oil price outlook .
Crude oil prices have generally been declining since March 2022 , when Russia ’ s full-scale invasion of Ukraine sent the price of Brent crude oil above $ 130 / b . The invasion occurred when oil inventories were already low , and the possibility of sanctions or physical disruptions to Russia ’ s oil production led to higher prices . Crude oil prices have fallen since then mainly because of slowing growth in both global economic activity and oil consumption .
Our crude oil price forecast reflects our expectation that oil production will outpace consumption , leading to builds in oil inventories . We forecast world production and consumption
10 FEBRUARY 2023 | FUEL OIL NEWS | www . fueloilnews . com