Short Term Energy Outlook

Highlights

• This edition of the Short‐Term Energy Outlook is the first to include forecasts for 2013.

·         EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $100 per barrel in 2012, $5 p er barrel higher than the average price last year.  For 2013, EIA expects WTI prices to continue to rise, reaching $106 per barrel in the fourth quarter of next year.  EIA’s forecast assumes that U.S. real gross domestic product (GDP) grows by 1.8 percent in 2012 and 2.5 percent in 2013, while world real GDP (weighted by oil consumption) grows by 2.9 percent and 3.8 percent in 2012 and 2013, respectively.
·         The forecast of average household heating expenditures for all heating fuels has been lowered from th e first forecast for the current winter published in the October 2011 Outlook, primarily as a result of the warm first half of this heating season.  Average household heating oil expenditures are now expected to increase by 4 percent this winter heating season (October 1 to March 31) compared with last winter.  In contrast, natural gas and propane expenditures are projected to decline by 7 percent and 1 percent, respectively, and electricity expenditures are 2 percent lower than last winter’s levels.
·         EIA expects regular‐grade motor gasoline retail prices to average $3.48 per gallon in 2012, 4 cents per gallon lower than last year, and $3.55 per gallon in 2013.  During the April through September peak driving season each year, prices are forecast to average about 5 cents per gallon higher than the annual average.  There is regional variation in the forecast, with average expected prices on the West Coast about 25 cents per gallon above the national average during the April through September period.

·         Natural gas working inventories continue to set new record highs and ended December 2011 at an estimated 3.5 trillion cubic feet (Tcf), about 12 percent above the same time last year.  EIA’s average 2012 Henry Hub natural gas spot price forecast is $3.53 per million British thermal units (MMBtu), a decline of almost $0.50 per MMBtu from the 2011 average spot price.  EIA expects that Henry Hub spot prices will average $4.14 per MMBtu in 2013.

                                      
http://www.eia.gov/forecasts/steo/

Contact:  Tancred Lidderdale      
tancred.lidderdale@eia.gov    phone: (202) 586-7321 

Short-Term Energy Outlook October 12, 2011 Release

Highlights


 EIA projects average household heating expenditures for natural gas, propane, and heating oil will increase by 3 percent, 7 percent, and 8 percent, respectively, this winter (October 1 to March 31) compared with last winter, while electricity heating expenditures fall by less than 1 percent. Average expenditures for households that heat with oil are forecast to be higher than in any previous winter.

 This forecast reflects higher prices for natural gas, propane, and heating oil, and slightly milder weather than last winter in much of the Nation contributing to lower consumption in many areas (see EIA Short Term Energy and Winter Fuels Outlook slideshow).

 According to the National Oceanic and Atmospheric Administration’s (NOAA) most recent projection of heating degree-days, the lower-48 States are forecast to be 2 percent warmer during the October through March winter heating season compared with last winter. However, heating degree-day projections vary widely among regions, with the West projected to be about 3 percent colder than last winter, and the South projected to be about 5 percent warmer.

 Forecast U.S. real gross domestic product (GDP) grows by 1.5 percent this year and by 1.8 percent next year, slightly lower than in last month’s Outlook. World oil-consumption-weighted real GDP grows by 3.0 percent and 3.5 percent in 2011 and 2012, respectively, compared with 3.1 percent and 3.8 percent in the last Outlook. EIA expects the U.S. average refiner acquisition cost of crude oil to average $99 per barrel in 2011 and $98 per barrel in 2012, compared with $100 per barrel and $103 per barrel, respectively, in the previous Outlook.

 Natural gas working inventories ended September 2011 at 3.4 trillion cubic feet (Tcf), about 2.6 percent, or 91 billion cubic feet (Bcf), below the 2010 end-of-September level. EIA expects that working natural gas inventories will approach last year’s high levels by the end the injection season. The projected Henry Hub natural gas spot price averages $4.15 per million British thermal units (MMBtu) in 2011, $0.24 per MMBtu lower than the 2010 average. EIA expects the rate of growth in domestic natural gas production to slow in 2012, with the Henry Hub spot price averaging $4.32 per MMBtu.

Contact:

Tancred Lidderdale
tancred.lidderdale@eia.gov
phone: (202) 586-7321

Will the market finally show signs of weakness?

Normal market trends are for gasoline to show signs of weakness as the refiners switch to winter grade gas. End of year weakness will normally cause a contango'd market to carry through the heating season; but this year, unexpected refinery problems and scheduled turnaround have kept prompt supplies of gasoline tight.
"The momentum is for a down start to the week unless we see more bids come into the market on the prompt side," said one trader. Other traders said that the market should return to the "seasonal normal" trend, which means it should begin to go into a winter contango. "It depends on how much gasoline imports you see coming in last week and the first half of November," a second trader said. The general market consensus is that the gasoline imports last week should be above 800,000 b/d, following three weeks of sub-par import levels.
Other traders anticipate that arbitrage hasn't brought in significant imports and not much has changed. Overall, anticipate the market to maintain until we see inventory values on Wednesday morning.