Demand for Oil and Natural Gas Continues to Set Records

The demand for crude oil and natural gas in the U.S. and around the globe continued at a record pace through the first half of 2024, and producers in Texas and throughout the nation struggled to keep pace with consumer demand.

On the international scene, the Organization of Petroleum Countries (OPEC) believes that demand will rise by 2 million barrels per day to 106 million barrels per day.

The Energy Information Administration forecasts that global consumption will increase by 1.1 million barrels per day this year.

EIA expects crude oil prices to increase during the second half of the year.

“The Brent crude oil spot price ended July at $81 per barrel, compared with an average for the month of $85 per barrel,” EIA stated in its Short-Term Energy Outlook issues on Aug. 6. “We expect the Brent price will return to between $85 per barrel and $90 per barrel by the end of the year.”

EIA based its forecast on falling global oil inventories, which is expected to decline by 0.4 million barrels per day in the first half of this year and 0.6 million barrels per day during the second half.

Crude oil and natural gas production in Texas—especially in the Permian Basin—sets records month after month, which has created problems getting all of that product from West Texas to refineries and shipping terminals on the Gulf Coast.

The oversupply has caused crude oil prices at the lease to be as much as 10% less than Brent, and natural gas prices at the West Texas hub Waha fell below zero several times this year.

EIA forecasts that natural gas consumption in August will decline by 2% from July.

“Because of falling consumption and flat production, we expect the Henry Hub price to stay relatively low, remaining below $2.50 per million British thermal units through October,” EIA said. “However, we expect seasonal increases in consumption for space heating, along with a ramp-up in liquefied natural gas (LNG) exports from new facilities in Texas and Louisiana, will push the Henry Hub price to average about $3.10 from November through March.”

Alex Mills is the former President of the Texas Alliance of Energy Producers.