Looks for 25% LNG export growth in 2019

By Richard Rostad, analyst, Oil & Gas 360

The EIA released its monthly Short-Term Energy Outlook (STEO) today, outlining the agency’s forecasts for energy in 2019 and 2020.

The EIA has shifted its oil and gas production forecasts, decreasing expected Q1 2019 output. The agency now expects the U.S. had produced 11.91 MMBOPD in Q1, down from its previous estimate of 11.98 MMBOPD. However, oil prices have risen beyond expectations driving accelerated growth in the rest of the forecast period. The EIA now the U.S. will produce 12.39 MMBOPD in 2019, up from the previous forecast of 12.30 MMBOPD.

Overall, crude oil production is expected to grow by 13% in 2019 and 5.7% in 2020. Natural gas growth, while slower than that of crude oil, will still be robust, with production expanding by 9.1% in 2019 and 1.6% in 2020. This growth does represent a slowdown from 2018, though. Last year saw American crude oil production expand by 17.2%, while natural gas output grew by 11.5%.

Consumption growth lags production growth

Oil and gas consumption, while growing, is not expanding nearly as quickly as production. The EIA expects liquids consumption will grow by 1.8% to 20.81 MMBPD in 2019, while natural gas consumption will grow by 3% to 84.61 Bcf/d.

The balance will be sent overseas, with exports of both petroleum and natural gas rising dramatically in 2019 and 2020.

The EIA’s forecasts of petroleum trade were adjusted for higher exports and lower imports in the latest STEO, and the country will likely begin net exports of liquids sometime in Q4 2019. U.S. natural gas exports are expected to grow by over 25% in 2019, averaging 12.4 Bcf/d in the year.

Globally, the EIA expects inventories to draw down in early 2019, as OPEC production cuts bite into supply. However, growing OECD production will drive builds in inventories in late 2019 and through 2020, meaning prices may not see significant upside on the horizon.

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