The U.S. Energy Information Administration (EIA) expects global oil inventories to decline by almost a half million barrels per day in the second half of 2023, causing oil prices to rise over the remainder of the year. In its September Short-Term Energy Outlook (STEO), EIA forecasts the Brent crude oil price will average $93 per barrel in the fourth quarter of this year, up from its August forecast of less than $88 per barrel.

Oil production cuts from OPEC+ members, including Saudi Arabia’s recently announced extension of additional voluntary production cuts, contribute to EIA’s forecasts for decreasing supplies.

“We expect crude oil prices to rise as global oil inventories decrease through the end of this year,” said EIA Administrator Joe DeCarolis. “High oil prices combined with uncertain economic conditions could lessen global demand for petroleum products through 2024.”

Overview 

Global oil production. This STEO incorporates Saudi Arabia’s September 5 announcement to continue its voluntary crude oil production cut of 1 million barrels per day (b/d) through the end of this year. Previously, the voluntary cut was set to expire at the end of September. Global oil inventories in our forecast fall by 0.2 million b/d in the fourth quarter of 2023 (4Q23) based on the extension of this production cut. 

Crude oil prices. We expect the Brent crude oil price to average $93 per barrel (b) during 4Q23, up from $86/b in August. A decline in global oil inventories in the coming months supports the Brent price in our forecast. The price eases to an average of $87/b by the second half of 2024 because we expect global oil inventories to rise during that period. 

U.S. gasoline consumption. We reduced our U.S. gasoline consumption forecast because the U.S. Census Bureau revised its population estimates for the United States to include fewer people of working age and more people of retirement age, who tend to drive less. The revised population estimates have also resulted in a downward revision of our vehicle miles traveled (VMT) forecast, which directly affects motor gasoline consumption. We forecast U.S. gasoline consumption will average 8.9 million b/d in 2023 and 8.7 million b/d in 2024. Our 2024 forecast is down by 0.2 million b/d from our August STEO. 

Total U.S. liquid fuels consumption. In our forecast, U.S. liquid fuels consumption averages 20.1 million b/d in 2023, down 0.3 million b/d from last month’s forecast. In addition to reduced gasoline consumption, this forecast incorporates changes to the Petroleum Supply Monthly that reclassified natural gasoline and unfinished oils from product supplied to crude oil supply to more accurately represent the use of these products. These changes also reduce our forecast 2024 consumption by 0.5 million b/d to 20.3 million b/d. 

Natural gas consumption. U.S. natural gas consumption in our forecast averages 80.5 billion cubic feet per day (Bcf/d) in September, an increase of 5% from last September and a record for September. The increase follows a period of elevated natural gas-fired electricity generation from strong U.S. air-conditioning demand in response to summer heat as well as reduced generation from coal-fired plants. 

Electricity generation. We forecast electricity generation in 3Q23 will increase 2% in the United States from the same period last year. The increase largely reflects warmer temperatures this summer and it follows a year-over-year 4% decline in electricity output during the first half of 2023.  

Propane price. Beginning with this STEO, we are publishing a forecast for the Mont Belvieu propane spot price. One of our Between the Lines supplements this month discusses this forecast in more detail. 

KeyFacts Energy Industry Directory: U.S. Energy Information Administration