US EIA trims 2019 oil price outlook on demand growth uncertainty

The US Energy Information Administration on Tuesday cut its outlook for 2019 oil prices by $3.50/b for WTI and $2.95/b for Brent in response to rising uncertainty about global oil demand growth.

EIA now expects Brent to average $66.69/b in 2019, down from $69.64/b in last month’s outlook. It held its 2020 Brent outlook steady at $67/b.

EIA sees WTI averaging $59.29/b in 2019, down from $62.79/b in last month’s outlook, and $63/b in 2020, unchanged.

“Demand-side concerns became the most salient issue during the past month and contributed to volatility and price declines for risk assets such as commodities and equities,” EIA said in its Short-Term Energy Outlook.

The report said the US/China trade conflict, potential US tariffs on Mexico and lower industrial activity have contributed to concerns “that economic growth could be lower than market participants’ expectations, which would cause oil demand growth to also be lower than expected.”

EIA also trimmed its outlook for US oil production. It sees 2019 output averaging 12.32 million b/d, down 130,000 b/d from last month’s outlook, and 2020 output averaging 13.26 million b/d, down 120,000 b/d from last month.

The report predicts US oil production will first hit 13 million b/d in January 2020, two months later than EIA projected in last month’s report.

US retail gasoline prices are expected to be lower this summer driving season as a result of lower crude prices.

EIA sees gasoline prices averaging $2.76/gal this summer, down from $2.85/gal last summer. The season runs June 1 to September 15.
Source: Platts