EIA released its short-term energy outlook today and the outlook is good. Working natural gas inventories are at record highs, WTI crude is expected to remain well below Brent and retail gasoline is projected to soften in 2013.
Hurricane Sandy had around 8.5 million people in the dark and shut down two East Coast refineries. Major petroleum distribution sites and pipelines also saw interruptions due to flooding and power outages, but the overall impact of the storm on energy production has been minimal so far.
Gasoline prices began October at $3.80/gallon and have been sliding lower ever since, pegging at $3.49 nationally on November 5. U.S. retail gasoline is excepted to average in the neighborhood of $3.56/gallon in Q4 2012. East Coast wholesale prices did spike marginally in response to Superstorm Sandy, and the ensuing uncertainty has held price declines in check.
Look for gasoline to average $3.44/gallon nationally in 2013.
WTI crude is projected to average $89/barrel in Q4 2012 -- that is four dollars less than in last month's outlook report. WTI-Brent spread is expected to fall from $22 in October to $11 in Q4 2012. WTI 2013 price to average $88/barrel -- Brent crude to stay at $103.
Total U.S. crude production is up year-to-date -- 0.7 million bbl/d higher year-over and is expected to remain robust into 2013. Current production levels are the highest they have been since 1993 and EIA fully expects that trend to continue.
Working natural gas inventories are at record levels totaling 3,908 Bcf as of October 26, 2012 -- 56 Bcf greater than 2011's previous record of 3,852 Bcf. EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, to average $2.77 per MMBtu in 2012 and $3.49 per MMBtu in 2013.