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EIA expects global consumption of liquid fuels to surpass 2019 levels in 2022

As outlined in its current Short-Term Energy Outlook, the US Energy Information Administration (EIA) estimates that global consumption of petroleum and liquid fuels averaged 92.3 million barrels per day (b/d) for all of 2020, down by 8.6 million b/d from 2019. EIA expects that global liquid fuels consumption will grow by 5.3 million b/d in 2021.

In the EIA forecast, global consumption of liquid fuels rises by an additional 3.7 million b/d in 2022 to 101.4 million b/d—surpassing 2019 levels.

Fig6

US liquid fuels consumption in 2020 averaged 18.1 million b/d, down 2.4 million b/d (12%) from 2019 consumption. EIA forecasts US liquid fuels consumption will rise to 19.6 million b/d in 2021 and then to 20.7 million b/d in 2022, which would surpass the 2019 level.

Based on EIA estimates, global liquid fuels inventories rose by 6.3 million b/d in 1H20 before declining at an average rate of 2.1 million b/d in 2H20 and 1H21. EIA forecasts global inventories will continue to fall in the near term but at a slower rate, with global inventories falling by 0.2 million b/d in 2H21. EIA then expect inventories to rise by almost 0.5 million b/d in 2022.

US regular gasoline retail prices averaged $2.78 per gallon (gal) in 1H21, compared with an average of $2.20/gal in 1H20. In June, monthly retail gasoline prices averaged $3.06/gal, the first time the monthly average was more than $3.00/gal since October 2014 (in nominal terms). EIA forecasts regular-grade gasoline prices to average $2.92/gal in 2H21 and $2.74/gal for all of 2022.

EIA expects that global oil production, largely from OPEC+ members (OPEC and partner nonmember countries), will increase by more than global oil consumption. Rising production will reduce the persistent global oil inventory draws that have occurred for much of the past year and keep prices similar to current levels, averaging $72/b during the second half of 2021 (2H21). However, for 2022, EIA expects that continuing growth in production from OPEC+ and accelerating growth in US tight oil production, along with other supply growth, will outpace growth in global oil consumption and contribute to declining oil prices. Based on these factors, EIA expects Brent to average $67/b in 2022.

Electricity. EIA forecasts that US retail sales of electricity will increase by 2.8% in 2021 after falling by 3.9% in 2020. The largest forecast increase in electricity consumption occurs in the industrial sector (+5.1%), driven by rising levels of economic output.

Retail sales of electricity to the commercial sector also grow in the forecast, but they grow at the slightly slower pace of 2.1% in 2021 as some workers continue working from home instead of in office buildings. EIA forecasts US residential electricity sales will grow by 1.9% in 2021, as a result of colder temperatures in 1Q21 compared with 1Q20 and a hot start to the summer.

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