Short-Term Energy Outlook March 6, 2012
- EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $106 per barrel in 2012, $5 per barrel higher than in the previous Outlook and $11 per barrel higher than the average price last year. Supply disruptions in the Middle East and Africa contributed to a significant increase in world crude oil prices during February. EIA has increased the forecast 2012 average cost of crude oil to U.S. refiners from $105 per barrel in last month’s Outlook to $115 per barrel. Constraints in transporting crude oil from the U.S. midcontinent region contribute to the expected continuing discount for WTI relative to other world crude oil prices. EIA expects WTI prices to remain relatively flat in 2013, averaging about $106 per barrel, while the U.S. refiner average cost of crude oil averages $110 per barrel.
- EIA expects regular‐grade motor gasoline retail prices to average $3.79 per gallon in 2012 and $3.72 per gallon in 2013, compared with $3.53 per gallon in 2011. During the April through September summer driving season this year, prices are forecast to average about $3.92 per gallon with a peak monthly average price of $3.96 per gallon in May. The June 2012 New York Harbor Reformulated Blendstock for Oxyge nate Blending (RBOB) futures contract averaged $3.26 for the five trading days ending March 1. Based on the market value of futures and options contracts, there is a 39 percent probability that its price at expiration will exceed $3.35 per gallon, consistent with a monthly average regular-grade gasoline retail price of roughly $4.00 per gallon in June. The value of futures and options contracts imply a 2 percent probability that its price at expiration will exceed $4.35 per gallon, consistent with a monthly average regular-grade gasoline retail price of approximately $5.00 per gallon.
- The warm weather this winter has resulted in natural gas working inventories that continue to set new record seasonal highs, with February 2012 ending at an estimated 2.44 trillion cubic feet (Tcf), about 41 percent above the same time last year. EIA’s average 2012 Henry Hub natural gas spot price forecast is $3.17 per million British thermal units (MMBtu), a decline of about $0.83 per MMBtu from the 2011 average spot price. EIA expects that Henry Hub spot prices will average $3.96 per MMBtu in 2013.
- EIA expects electricity generation from coal to decline by nearly 5 percent in 2012 as generation from natural gas increases by about 9 percent. EIA forecasts that electricity generation from coal will increase by 3.8 percent in 2013, as projected coal prices to the power sector fall slightly while natural gas prices increase, and coal regains some of its power sector generation share.