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 

THIS WEEK IN PETROLEUM REPORT RELEASE – October 26, 2011

Brazil will be responsible for some of the world's largest increases in oil production in the coming decades.  Advances in seismic imaging have enabled the discovery of offshore "pre-salt" deposits of oil in Brazil's Campos and Santos Basins (Figure 1).  These pre-salt fields, so-called because they lie under massive layers of salt, are located 18,000 feet below the ocean floor under more than 6,000 feet of salt.  Brazil already produces 2.1 million barrels per day (bbl/d) of crude oil and lease condensate, yet just became a net exporter in 2008.  Pre-salt development, coupled with the ability to meet a large share of domestic demand with biofuels, is projected to transform the country into a major oil exporter.

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

Short-Term Energy Outlook

July 12, 2011 Release

Highlights

· World crude oil prices initially fell following the June 23 announcement by the International Energy Agency (IEA) that its member countries would release up to 60 million barrels from strategic reserves but then rose above the pre-announcement levels in late June and early July. Attributing observed price changes since June 23 to the IEA announcement is difficult because other drivers, including changing expectations of world economic and crude oil consumption growth, uncertainty over oil supply disruptions, estimates of OPEC spare production capacity, and other physical and financial factors are continually affecting oil prices. Although the IEA release will provide some additional supply, EIA expects oil markets to tighten through 2012. Given projected world oil demand growth and slowing growth in supply from countries that are not members of the Organization of the Petroleum Exporting Countries (OPEC), the projected U.S. average refiner acquisition cost of crude oil rises from $102 per barrel in 2011 to $108 per barrel in 2012, about $1 per barrel below last month’s Outlook.

· The regular-grade gasoline monthly average retail price fell from $3.91 per gallon in May to $3.68 per gallon in June, reflecting the decline in crude oil prices from their April peak and a recovery from unexpected refinery outages and Mississippi River flooding. EIA expects regular-grade gasoline prices will average $3.62 per gallon and $3.51 per gallon over the third and fourth quarters of 2011, respectively.

· Natural gas working inventories ended June 2011 at 2.5 trillion cubic feet (Tcf), about 8 percent, or 214 billion cubic feet (Bcf), below the 2010 end-of-June level. EIA expects that working gas inventories will build strongly during the summer and approach record-high levels in the second half of 2011. The projected Henry Hub natural gas spot price averages $4.27 per million British thermal units (MMBtu) in 2011, $0.12 per MMBtu lower than the 2010 average. EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of $4.54 per MMBtu.

http://www.eia.doe.gov/emeu/steo/pub/contents.html

Chinese Oil Demand 101: The Role of Electricity

Despite recent decreases in crude oil prices and concern over the pace of economic growth in Organisation for Economic Co-operation and Development (OECD) countries, supply and demand fundamentals underlying the oil market remain strong. Far from reducing their expectations of global oil demand growth for 2011, the U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook and other forecasters have recently raised their demand projections. EIA is currently projecting global oil demand to average 88.4 million barrels per day (bbl/d) in 2011, 1.7 million bbl/d higher than in 2010. Of that increment, China alone is expected to account for some 700 thousand bbl/d. Why such strong growth, and why the upward revisions, given that most forecasters are becoming, if anything, slightly less optimistic about China's economy?

U.S. Oil Import Dependence: declining no matter how you measure it

U.S. oil import dependence is an issue perhaps as hotly debated as it is loosely defined. As discussed in a This Week in Petroleum article published in 2008, there is more than one way of measuring it. Different methods of calculation yield different results. But whichever way it is defined, U.S. dependence on imported oil has dramatically declined since peaking in 2005, continuing a trend that was beginning to emerge the last time This Week In Petroleum examined the issue. By the broadest measure, U.S. dependence on imported oil fell below the 50 percent mark last year for the first time since 1997. To put it succinctly, discrepancies in the way dependence is assessed arise because oil, for the most part, is imported as crude oil, but is consumed as refined products, of which crude oil is the main but not the only input - hence the need to clarify whether dependence is assessed at the output/consumption level or at the input level, and in the latter case what range of inputs is included as a basis for comparison. Two of the most common and straightforward definitions measure dependence as the ratio of total net oil imports (including crude and products) to total product consumption, or much more narrowly as the ratio of net imported crude oil to net crude oil inputs to refineries.

Short-Term Energy Outlook

May 10, 2011 Release

Highlights

West Texas Intermediate (WTI) crude oil spot prices averaged $89 per barrel in February, $103 per barrel in March, and $110 per barrel in April. During the first week of May WTI crude oil prices fell by nearly $17 per barrel to $97 per barrel, along with a broad set of commodities, and then rebounded by almost $6 per barrel yesterday. However, EIA still expects oil markets to continue tighten through 2012 given projected world oil demand growth and slowing growth in supply from countries that are not members of the Organization of the Petroleum Exporting Countries (OPEC). Projected WTI spot prices average $103 per barrel in 2011 and $107 per barrel in 2012, reductions of about $4 and $6 per barrel respectively from last month’s Outlook.

Despite the moderate downward revision to the outlook for oil prices, the rise in crude oil prices from last year continues to imply higher petroleum product prices this year compared with last. EIA forecasts that the annual average regular-grade retail gasoline price will increase from $2.78 per gallon in 2010 to $3.63 per gallon 2011 and to $3.66 per gallon in 2012. The forecast regular-grade motor gasoline retail price averages $3.81 per gallon during this summer’s driving season (from April 1 through September 30), up from $2.76 per gallon last summer, but 5 cents per gallon lower than last month’s Outlook. The forecast U.S. monthly average regular gasoline price during the summer peaks in June at $3.88 per gallon. Prices of futures and options contracts for wholesale gasoline over the 5 days ending May 5 suggest a 41-percent probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during July 2011.

Natural gas working inventories ended April 2011 at 1.8 trillion cubic feet (Tcf), about 11 percent, or 230 billion cubic feet (Bcf), below the 2010 end-of-April level. EIA expects that working gas inventories will build strongly during the summer and approach record-high levels in the second half of 2011. The projected Henry Hub natural gas spot price averages $4.24 per million British thermal units (MMBtu) in 2011, $0.15 per MMBtu lower than the 2010 average. EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of $4.65 per MMBtu.

To see details of this forecast update, go to the following World Wide Web site on the Internet:
http://www.eia.doe.gov/emeu/steo/pub/contents.html

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

or

Neil Gamson
neil.gamson@eia.gov
phone (202) 586-2418