The U.S. Energy Information Administration (EIA) released its October Short-term Energy Outlook (STEO) today which projects electricity expenditures in the U.S. 3% below last winter. The added savings will be due to projected weak demand for propane, heating oil and natural gas, all of which are currently in good supply. Natural gas inventories are projected to end the summer injection season with stocks at the end of October at a record 3,956 billion cubic feet (bcf), 116 bcf above last month's STEO projection. That will pressure electricity costs where natural gas is used for power generation. EIA trimmed its forecast WTI crude oil price by shaving $6.00 off the top end of its range from last month to $67/barrel with the low end unchanged at $32/barrel. WTI crude production slowed its August decline in September and EIA left its 2015 crude output target unchanged at an average of 9.2 million barrels per day and raised its 2016 output projection by a tenth of a point to 8.9 million barrels per day.
Full text highlights from EIA follow or view the full report here...
Short-Term Energy Outlook
October 6, 2015 Release
- EIA projects average U.S. household expenditures for natural gas, heating oil, and propane during the upcoming winter heating season (October 1 through March 31) will be 10%, 25%, and 18% lower, respectively, than last winter, because of lower fuel prices and lower heating demand. Forecast lower heating demand and relatively unchanged prices contribute to electricity expenditures that are 3% lower than last winter (Winter Fuels Outlook slideshow).
- North Sea Brent crude oil prices averaged $48/barrel (b) in September, a $1/b increase from August. However, volatility remained high during September. EIA forecasts that Brent crude oil prices will average $54/b in 2015 and $59/b in 2016, unchanged from last month's STEO. 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 January 2016 delivery suggest the market expects WTI prices to range from $32/b to $67/b (at the 95% confidence interval) in January 2016.
- U.S. regular gasoline monthly retail prices averaged $2.37/gallon (gal) in September, a decrease of 27 cents/gal from August and $1.04/gal lower than in September 2014. EIA expects monthly gasoline prices to decline to an average of $2.03/gal in December 2015. EIA forecasts U.S. regular gasoline retail prices to average $2.38/gal in 2016.
- EIA estimates that total U.S. crude oil production declined by 120,000 barrels per day (b/d) in September compared with August. Crude oil production is forecast to decrease through mid-2016 before growth resumes late in 2016. Projected U.S. crude oil production averages 9.2 million b/d in 2015 and 8.9 million b/d in 2016.
- Natural gas working inventories were 3,538 billion cubic feet (Bcf) on September 25. This level was 15% higher than a year ago and 4% higher than the previous five-year average (2010-14) for this week. EIA projects inventories will close the injection season at the end of October at 3,956 Bcf, which would be the highest end-of-October level on record.