The U.S. Energy Information Administration (EIA) released its December Short-term Energy Outlook (STEO) this week. The report made minor adjustments to Brent crude oil price forecasts, lowering the 2015 average price per barrel by $1 to $53 per barrel. The forecast for 2016 Brent prices to average $56 per barrel is unchanged from last month's report.
West Texas Intermediate crude oil production forecasts were unchanged at an average of 9.3 million barrels per day in 2015 and 8.8 million barrels per day in 2016. U.S. crude oil production registered a 60,000 barrels per day decline from the previous month.
The average 2015 projected national average gasoline price was lowered by 2 cents per gallon to $2.04 in December and the forecast for the average 2016 price per gallon was lowered 3 cents to $2.36.
Natural gas inventories continue to build even as natgas overtakes coal for power generation. Natural gas supplies were reported at a record 4,009 billion cubic feet on November 20. The following week, natgas inventories were 16% higher than the same time last year and 7% higher than the five-year average.
Full text highlights from EIA's December STEO follow, or view the full report by clicking here...
- North Sea Brent crude oil prices averaged $44/barrel (b) in November, a $4/b decrease from October. Global oil inventories are estimated to have increased by 1.3 million barrels per day (b/d) in November, putting downward pressure on Brent prices.
- EIA forecasts that Brent crude oil prices will average $53/b in 2015 and $56/b in 2016. Forecast West Texas Intermediate (WTI) crude oil prices average $4/b lower than the Brent price in 2015 and $5/b lower in 2016. The current values of futures and options contracts for March 2016 delivery (Market Prices and Uncertainty Report) suggest the market expects WTI prices to range from $30/b to $63/b (at the 95% confidence interval).
- The monthly average price of U.S. regular retail gasoline was $2.16/gallon (gal) in November, a decrease of 13 cents/gal from October and 75 cents/gal lower than in November 2014. EIA forecasts U.S. regular gasoline retail prices to average $2.04/gal in December 2015 and $2.36/gal for 2016.
- EIA estimates that total U.S. crude oil production declined by about 60,000 b/d in November compared with October. Crude oil production is forecast to decrease through the third quarter of 2016 before growth resumes late in 2016. Projected U.S. crude oil production averages 9.3 million b/d in 2015 and 8.8 million b/d in 2016.
- Natural gas working inventories were a record 4,009 billion cubic feet (Bcf) on November 20. On November 27, inventories were 16% higher than during the same week last year and 7% higher than the previous five-year average (2010-14) for that week. EIA expects the Henry Hub natural gas spot price to average $2.47/million British thermal units (MMBtu) this winter (October 2015-March 2016) compared with $3.35/MMBtu last winter.
- Electricity generated from natural gas-fired power plants exceeded generation from coal-fired plants in September for the third month in a row. Before April 2015, the monthly share of total U.S. generation fueled by coal had always been larger than the natural gas share. Natural gas generation in September was 4% higher than the level generated by coal. This increased use of natural gas for electricity generation primarily reflects sustained low prices for the fuel.