A drop in total U.S. energy consumption is expected next year, the U.S. Energy Information Administration (EIA) said on Tuesday, citing uncertainty in macroeconomic conditions
which could significantly affect energy markets.
Based on the S&P Global macroeconomic model, the country's gross domestic product (GDP) is expected to fall slightly in 2023, which will also contribute to the decline of energy consumption, the EIA said in its November Short-Term Energy Outlook report.
According to the report, U.S. natural gas inventories ending October 2022 stood at more than 3.5 trillion cubic feet (Tcf), four percent below the five-year average. The EIA forecasts the figure will fall by 2.1 Tcf this winter to 1.4 Tcf by the end of March 2023, when inventories will be eight percent below the five-year average.
The EIA also expects natural gas prices will decline after January as the deficit to the five-year average in inventories went down. Storage levels of natural gas heading into winter is higher than what EIA expected previously.
Renewable sources are expected to provide 22 percent of U.S. electricity generation this year and 24 percent in the coming year, as generation from natural gas declines from 38 percent in 2022 to 36 percent in 2023, said the report. The surge in the country's renewables generation comes mostly from solar and wind capacity additions.
U.S. distillate fuel inventories were 104 million barrels at the end of last month, the lowest end-of-October level since 1951, and 17 percent below the five-year average in EIA forecast for 2023. The EU ban on seaborne imports of petroleum products from Russia creates supply uncertainty for distillate markets in early 2023.
This winter, the average U.S. home that uses heating oil as its primary space heating fuel will see expenditures soar by 45 percent compared with last winter, the EIA forecasts, citing higher heating oil prices and consumption due to colder forecasted temperatures.
The EIA also forecasts that crude oil production of the Organization of the Petroleum Exporting Countries (OPEC) will fall in the last two months of this year.
Annual OPEC production will average 28.9 million barrels per day (b/d) in 2023, up by 0.3 million b/d from 2022, the EIA forecasts.
Growth in OPEC and non-OPEC oil production, which is most notably in the United States, keeps the Brent crude oil price in EIA forecast lower on an annual average basis in 2023 than in 2022, said the report, expecting the Brent crude oil price will begin rising in the second quarter of next year.
