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EIA: Retail Diesel Estimate for 2020 Revised 7cts Higher
7/07 12:41 PM
EIA: Retail Diesel Estimate for 2020 Revised 7cts Higher OAKHURST, N.J. (DTN) --- In its latest Short-Term Energy Outlook, the Energy Information Administration again nudged higher its retail diesel price estimate for 2020 on improving economic activity and freight movements. Estimated at $2.52 gallon in 2020, EIA revised higher by 7cts its diesel price estimate for this year versus the prior month STEO while revising gallon its 2021 estimate up by 9cts to $2.58. For 2020 and 2021, the agency estimated heating oil at $2.47 gallon and $2.58 gallon, up 4cts and 8cts, respectively. Consumption of United States liquid fuels fell in early 2020 as a result of reduced travel because of COVID-19 and associated mitigation measures, reaching a low point in April of 14.7 million bpd. Initial data show consumption increased to 16.1 million bpd in May and to 17.5 million bpd in June as states relaxed travel restrictions. EIA expects consumption will continue increasing in the second half of the year as economic activity increases. The agency estimates U.S. distillate fuel consumption at 3.7 million bpd this year and 3.8 million bpd next, down from 4.1 million bpd in 2019. Distillate consumption in the forecast is less affected on a percentage basis by COVID-19 mitigation efforts than jet fuel consumption, which is driven by economic activity and by freight movements. Distillate consumption is more likely affected by slowing economic growth than by travel restrictions. The fuel is also used in activities that are less directly affected by restrictions, such as for diesel engines of heavy construction equipment and as heating oil for both space heating in buildings and industrial heating. The restrictions may have indirectly affected these uses over time as a result of reduced economic activity that eventually led to a decrease in consumer spending for all goods. Diesel fuel is also used in oil and natural gas drilling operations, which have decreased significantly. U.S. gross domestic product reached an estimated low in the second quarter, and EIA assumes it will increase throughout the forecast, driving the recovery in distillate consumption. EIA forecasts that U.S. consumption of petroleum and other liquid fuels will average 18.89 million bpd in the second half of 2020, up from an average of 17.7 million bpd in the first half of the year. EIA forecasts that annual consumption in 2020 will average 18.3 million bd, down 2.1 million bpd from 2019. On a volumetric basis, almost half of the decrease in 2020 of U.S. consumption of liquid fuels is reduced gasoline use. On a percentage basis, however, jet fuel consumption declines the most, down 31% in 2020 from 2019, followed by residual fuel oil down 20%, gasoline down 10%, and distillate down 10%. The agency forecasts U.S. consumption of liquid fuels will recover to 19.9 million bpd in 2021. (c) Copyright 2020 DTN, LLC. All rights reserved.