WASHINGTON — In its most recent Short-Term Energy Outlook Report, the Energy Information Administration (EIA) outlines predicted trends in the economy, oil prices, renewable diesel production and natural gas prices, noting that crude oil prices are likely to increase heading into 2024 but diesel fuel prices will likely stay below $4 for most of 2024.
The national average for on-highway diesel price will be $3.88 per gallon by the end of 2023, then increasing to $3.92 by the fourth quarter of next year, according to the report.
EIA officials note that their economic forecast “assumes U.S. GDP growth of 1.5% in 2023 and 1.3% in 2024, which is revised up from last month’s forecast of 1.3% in 2023 and 1.0% in 2024.”
The EIA report states that the upward revision is partially driven by an updated estimate of real GDP growth in the first quarter of 2023 (1Q23) resulting from more consumer spending and aggregate investment.
Crude oil prices
The EIA forecasts that the Brent crude oil spot price will average $78 per barrel in July. Crude oil prices gradually increase throughout the forecast, reaching about $80 per barrel in 4Q23 and averaging about $84 per barrel in 2024 “because we expect that global oil inventories will decline over the next five quarters,” the report notes.
U.S. renewable diesel production
As a result of the U.S. Environmental Protection Agency’s revised Renewable Fuel Standard rule establishing biofuel volume requirements that was issued on June 21, EIA has reduced their forecast for renewable diesel production growth. However, EIA officials note that they still expect renewable diesel production will grow in the U.S. to reach 219,000 barrels a day in 2024.
Natural gas prices
EIA officials say they expect the Henry Hub spot price will rise in the coming months as declining natural gas production narrows the existing surplus of natural gas inventories compared with the five-year average. Henry Hub prices in the forecast average more than $2.80 per million British thermal units (MMBtu) in the second half of 2023 (2H23), up from about $2.40/MMBtu in the first half of the year.
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