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What You Need to Know About EIA's Short-Term Energy Outlook
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In a monthly report, the U.S. Energy Information Administration (“EIA”) reduced its oil price forecasts for 2022 and 2023.
Let us drill down EIA’s most recent short-term energy outlook:
Oil
Price: The EIA lowered its 2022 view on WTI crude — the U.S. benchmark — by $3.68 to $98.79 a barrel, and pulled back its price forecast for next year by $3.49 to $89.75 a barrel. The reason for the downward adjustment to price realizations is the increase in domestic oil supplies and the creation of a more balanced market.
Production: The agency forecast that U.S. crude oil output will rise by 720,000 barrels per day to 11.91 million barrels per day (MMbbl/d) in 2022. Last month, it expected a 730,000 barrel-per-day year-over-year increase to 11.92 MMbbl/d.
For 2023 too, it sees production going up less than previously expected — increasing 860,000 barrels per day to 12.77 MMbbl/d, the most on record. In June, the EIA expected a 1.05 million-barrel-per-day-improvement to 12.97 MMbbl/d.
The downward revision to the production outlook reflects inflation-related headwinds and supply-chain issues.
Demand: Meanwhile, the EIA has projected that domestic oil demand for 2022 is set to expand by 700,000 barrels per day, less than its previous forecast of 750,000 barrels per day increase as high gasoline prices deter usage. Next year, crude consumption is expected to rise by 320,000 barrels a day versus 200,000 previously.
Natural Gas
Price: The EIA forecasts an average price of $6.02 per MMBtu over the course of 2022, down 18.6% from the June forecast. However, it expects 2023 prices to average $4.76 per MMBtu, a marginal increase of 2 cents from the previous forecast. Last year, the fuel was sold at $3.91 per MMBtu.
The reduction to this year’s projection reflects an extended outage at the nation’s biggest LNG export plant at Freeport that would lower natural gas shipments abroad. But as one can see, the commodity’s price is set for a slight uptick in 2023, primarily due to lower domestic production that is expected to result in a tighter market next year.
Production: U.S. dry natural gas production is forecast to rise from 93.55 billion cubic feet a day (Bcf/d) in 2021 to an all-time high of 96.23 Bcf/d in 2022, increasing further to 99.98 Bcf/d next year. The upward trajectory is based on higher drilling activity on the back of elevated prices and rig counts.
Demand: EIA projects domestic gas consumption to increase to a record 85.85 Bcf/d this year from 82.98 Bcf/d in 2021 due to strong economic activity and power burn. But next year, natural gas usage is expected to edge down by 0.47 Bcf/d. Per the EIA, the offtake of more renewable energy sources will marginally reduce electric power demand in 2023.
Final Word
Overall, oil and natural gas prices remain elevated due to a relatively constructive demand picture, supply uncertainty and the geopolitical premium from Russia’s invasion of Ukraine.
As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 24% year to date against a 20.2% loss for the broader S&P 500 benchmark.
Consequently, the top three gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum (OXY - Free Report) , Coterra Energy (CTRA - Free Report) and ExxonMobil (XOM - Free Report) .
Occidental Petroleum: OXY is the top-performing S&P 500 stock in 2022, with a gain of 100.1%. Occidental Petroleum’s expected EPS growth rate for three to five years is currently 32.3%, which compares favorably with the industry's growth rate of 30.4%.
OXY has a projected earnings growth rate of 305.1% for this year. The Zacks Consensus Estimate for Occidental Petroleum’s 2022 earnings has been revised 6.2% upward over the past 60 days.
Coterra Energy: This stock is the second-best performer in the S&P 500 Index, with shares having appreciated 47.4% in 2022. CTRA, carrying a Zacks Rank of #2 (Buy), has a projected earnings growth rate of 89.3% for this year.
The Zacks Consensus Estimate for Coterra Energy’s 2022 earnings has been revised 4.2% upward over the past 60 days. CTRA’s expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 27%.
ExxonMobil: ExxonMobil shares have appreciated 38.7% so far in 2022. XOM has a projected earnings growth rate of 109.7% for this year.
The Zacks Consensus Estimate for ExxonMobil’s 2022 earnings has been revised 11% upward over the past 60 days. XOM beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 1.3%.
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What You Need to Know About EIA's Short-Term Energy Outlook
In a monthly report, the U.S. Energy Information Administration (“EIA”) reduced its oil price forecasts for 2022 and 2023.
Let us drill down EIA’s most recent short-term energy outlook:
Oil
Price: The EIA lowered its 2022 view on WTI crude — the U.S. benchmark — by $3.68 to $98.79 a barrel, and pulled back its price forecast for next year by $3.49 to $89.75 a barrel. The reason for the downward adjustment to price realizations is the increase in domestic oil supplies and the creation of a more balanced market.
Production: The agency forecast that U.S. crude oil output will rise by 720,000 barrels per day to 11.91 million barrels per day (MMbbl/d) in 2022. Last month, it expected a 730,000 barrel-per-day year-over-year increase to 11.92 MMbbl/d.
For 2023 too, it sees production going up less than previously expected — increasing 860,000 barrels per day to 12.77 MMbbl/d, the most on record. In June, the EIA expected a 1.05 million-barrel-per-day-improvement to 12.97 MMbbl/d.
The downward revision to the production outlook reflects inflation-related headwinds and supply-chain issues.
Demand: Meanwhile, the EIA has projected that domestic oil demand for 2022 is set to expand by 700,000 barrels per day, less than its previous forecast of 750,000 barrels per day increase as high gasoline prices deter usage. Next year, crude consumption is expected to rise by 320,000 barrels a day versus 200,000 previously.
Natural Gas
Price: The EIA forecasts an average price of $6.02 per MMBtu over the course of 2022, down 18.6% from the June forecast. However, it expects 2023 prices to average $4.76 per MMBtu, a marginal increase of 2 cents from the previous forecast. Last year, the fuel was sold at $3.91 per MMBtu.
The reduction to this year’s projection reflects an extended outage at the nation’s biggest LNG export plant at Freeport that would lower natural gas shipments abroad. But as one can see, the commodity’s price is set for a slight uptick in 2023, primarily due to lower domestic production that is expected to result in a tighter market next year.
Production: U.S. dry natural gas production is forecast to rise from 93.55 billion cubic feet a day (Bcf/d) in 2021 to an all-time high of 96.23 Bcf/d in 2022, increasing further to 99.98 Bcf/d next year. The upward trajectory is based on higher drilling activity on the back of elevated prices and rig counts.
Demand: EIA projects domestic gas consumption to increase to a record 85.85 Bcf/d this year from 82.98 Bcf/d in 2021 due to strong economic activity and power burn. But next year, natural gas usage is expected to edge down by 0.47 Bcf/d. Per the EIA, the offtake of more renewable energy sources will marginally reduce electric power demand in 2023.
Final Word
Overall, oil and natural gas prices remain elevated due to a relatively constructive demand picture, supply uncertainty and the geopolitical premium from Russia’s invasion of Ukraine.
As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 24% year to date against a 20.2% loss for the broader S&P 500 benchmark.
Consequently, the top three gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum (OXY - Free Report) , Coterra Energy (CTRA - Free Report) and ExxonMobil (XOM - Free Report) .
Occidental Petroleum: OXY is the top-performing S&P 500 stock in 2022, with a gain of 100.1%. Occidental Petroleum’s expected EPS growth rate for three to five years is currently 32.3%, which compares favorably with the industry's growth rate of 30.4%.
OXY has a projected earnings growth rate of 305.1% for this year. The Zacks Consensus Estimate for Occidental Petroleum’s 2022 earnings has been revised 6.2% upward over the past 60 days.
Coterra Energy: This stock is the second-best performer in the S&P 500 Index, with shares having appreciated 47.4% in 2022. CTRA, carrying a Zacks Rank of #2 (Buy), has a projected earnings growth rate of 89.3% for this year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coterra Energy’s 2022 earnings has been revised 4.2% upward over the past 60 days. CTRA’s expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 27%.
ExxonMobil: ExxonMobil shares have appreciated 38.7% so far in 2022. XOM has a projected earnings growth rate of 109.7% for this year.
The Zacks Consensus Estimate for ExxonMobil’s 2022 earnings has been revised 11% upward over the past 60 days. XOM beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 1.3%.