International benchmark Brent crude oil is expected to rise from $61 per barrel in 2019 to $65 per barrel in 2020, up from the end of 2018 but lower than the 2018 average of $71 per barrel, according to the U.S. Energy Information Administration (EIA). U.S. benchmark West Texas Intermediate crude oil was $8 per barrel lower than Brent in December, and the difference between the two is expected to narrow to $4 per barrel in the fourth quarter of 2019 and throughout 2020.
U.S. regular retail gasoline should follow changes in the cost of crude oil and decline to an average of $2.47 per gallon in 2019, from $2.73 per gallon in 2018, before rising to $2.62 per gallon in 2020. A $1 per barrel change in the price of crude oil typically translates to a 2.4-cent per gallon change in the price of petroleum products such as gasoline because a barrel of crude oil holds 42 gallons.
Global inventories of petroleum and other liquid fuels rose 0.4 million barrels per day in 2018 and 1 million barrels per day in the fourth quarter of 2018. The inventories are expected to rise 0.2 million barrels per day in 2019 and 0.4 million barrels per day in 2020 for the United States and other countries that are not part of the Organization of the Petroleum Exporting Countries (OPEC).
While oil prices are expected to remain lower than in 2018, prices are expected to rise in early 2019 to meet rising demand and inventory to cover demand for five-year average levels. Crude oil prices are projected to continue to rise in late 2019 and early 2020 because of rising refinery demand for light-sweet crude oil as a result of regulations from the International Maritime Organization limiting the sulfur content in marine fuels used by vessels on the ocean.
Growth in global oil production is expected to be led by countries that are not part of OPEC, such as the United States. Non-OPEC producers should increase oil supply by 2.4 million barrels per day in 2019, offsetting expected declines from OPEC members, resulting in a global supply rise of 1.4 million barrels per day in 2019. Oil production is expected to increase by 1.7 million barrels per day in 2020. Oil demand is projected to increase by 1.5 million barrels per day in 2019 and in 2020.