The United States Energy Information Administration released its February Short-term Energy Outlook this month which forecast crude oil prices to average $31 per barrel in 2016, down 7 dollars per barrel from the previous forecast. Crude oil production is set to fall slightly according to EIA which projects WTI crude production to average 8.7 million barrels per day, down 9.5% from 2015's average production. The report also calls for pressure to continue on crude oil production into 2017 when U.S. production is forecast at an average of 8.5 million barrels per day. EIA noted U.S. crude oil production fell 70,000 barrels per day below December 2015 output in January 2016.
The national average gasoline price forecast was lowered 5 cents from January's forecast to $1.98 in 2016. The report expects U.S. gasoline prices to slip to the lowest level in seven years at $1.82 per gallon nationally before firming slightly into spring.
EIA didn't make much change to its projected 2016 natural gas prices, lowering the Henry Hub price peg just a penny to an average of $2.64 per billion cubic feet.
Click here to view the full report from EIA.
Complete text highlights from EIA's February Short-term Energy Outlook follow...
- North Sea Brent crude oil prices averaged $31/barrel (b) in January, a $7/b decrease from December and the lowest monthly average price since December 2003. Brent crude oil prices averaged $52/b in 2015, down $47/b from the average in 2014 . Growth in global liquids inventories, which averaged 1.8 million barrels per day (b/d) in 2015, continues to put downward pressure on Brent prices .
- Brent crude oil prices are forecast to average $38/b in 2016 and $50/b in 2017. Forecast West Texas Intermediate (WTI) crude oil prices are expected to average the same as Brent in both years . However, the current values of futures and options contracts continue to suggest high uncertainty in the price outlook. For example, EIA’s forecast for the average WTI price in May 2016 of $ 36/b should be considered in the context of recent Nymex contract values for May 2016 delivery (Market Prices and Uncertainty Report) suggesting that the market expects WTI prices to range from $ 21/b to $ 58/b (at the 95% confidence interval).
- The U.S. retail regular gasoline price is forecast to average $1.98/gallon (gal) in 2016 and $2.21/gal in 2017, compared with $2.43/gal in 2015. In January, the average retail regular gasoline price was $1.95/gal, a decrease of 9 cents/gal from December and the first time monthly gasoline prices averaged below $2/gal since March 2009 . EIA expects the monthly average retail price of U.S. regular gasoline to reach a seven-year low of $1.82/gal in February 2016, before rising during the spring.
- U.S. crude oil production averaged an estimated 9.4 million b/d in 2015, and it is forecast to average 8.7 million b/d in 2016 and 8.5 million b/d in 2017. EIA estimates that crude oil production in January was 70,000 b/d below the December level, which was 9.2 million b/d .
- Natural gas working inventories were 2,934 billion cubic feet (Bcf) on January 29, 20% higher than during the same week last year and 18% higher than the previous five-year average (2011-15) for that week. EIA forecasts that inventories will end the winter heating season (March 31) at 2,096 Bcf, which would be 41% above the level at the same time last year. Henry Hub spot prices are forecast to average $2.6 4 /million British thermal units (MMBtu) in 2016 and $3.22/MMBtu in 2017, compared with an average of $2.63/MMBtu in 2015.