On Jan. 6, after trending upwards since early October 2019, Feb-20 WTI crude futures reached a nine-month-high. The contract rose almost 3 percent after tensions were heightened between Iran and the U.S. following the U.S. killing of Iranian Major General Qasem Soleimani.
Since Jan. 6, the Feb-20 WTI crude contract corrected in five consecutive down sessions before finding some support around $58.23 on Jan. 14.
That same day, EIA estimated 2019 U.S. crude production reached a new record and forecast that producers would surpass that mark in both 2020 and 2021.
EIA raised its forecast for average 2020 WTI oil pricing to $59.25 per barrel, up nearly 8 percent from its forecast last month but down about $4 from the 2019 average. Brent crude prices for 2020 were pegged at $64.83, up just over 7 percent from last month’s forecast.
If crude is cheaper in 2019, U.S. ethanol pricing could be impacted as oil can readily substitute ethanol fuel. However, growing support for environmental mandates requiring greater ethanol use will likely continue to support ethanol pricing.
Neutral to bullish production forecasts, at 1.04 million barrels per day, may also support ethanol prices through this year.