The U.S. Energy Information Administration (EIA) released its Short-term Energy Outlook today.
Brent crude prices have been on the rise since reaching a low of $89.00 per barrel in July of this year, peaking in late August at $117.00. Crude prices are expected to decline over the rest of 2012, averaging $111.00 a barrel, dropping to $103.00 by first quarter 2013. West Texas Intermediate (WTI) spot crude prices were up only $17.00 per barrel during the same period as the WTI discount expanded from $10 to $22 per barrel. Projections for WTI crude into 2013 have prices averaging $93.00 per barrel with the WTI discount shrinking to just $9.00.
Total crude production is expected to average 6.3 million barrels per day (bbl/d) in 2012, up 0.7 million bbl/d over last year. Projected domestic crude production expects increases in 2013 amounting to 6.8 million bbl/d which would be the highest production output since 1993.
EIA raised the average regular-gasoline retail price forecast for the third quarter of 2012 to $3.66 per gallon, up $0.17 from $3.49 the previous month. The report expects retail gasoline prices to soften later this month as the market transitions from summer-grade to winter-grade gasoline specifications. Regular gasoline price forecasts put the fourth quarter at $3.58 and $0.15 lower for first quarter 2013 to $3.43.
The report says higher crude oil prices, refinery outages, a pipeline disruption and Hurricane Isaac all contributed to higher gasoline prices in the month of August.
Natural gas has had a wild ride this summer. EIA expects the recent trend of substituting coal-fired electricity generation with natural gas generation to slow and likely reverse over the coming year. Coal-fired electricity is expected to rise 9% in 2013 while natural gas generation anticipates a 10% decline.
Working inventories of natural gas ended August 2012 13% over the previous year at 3.4 trillion cubic feet. Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units(MMBtu) in 2011, is projected to average $2.65 per MMBtu in 2013.