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Short-Term Energy Outlook Nov. 8, 2011


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EIA expects the U.S. average refiner acquisition cost of crude oil to remain relatively flat, averaging about $100 per barrel in 2011 and 2012.  The value of West Texas Intermediate (WTI) benchmark crude oil was about $11 per barrel below the U.S. refiner acquisition cost of crude oil in the third quarter of this year.  The forecast WTI price discount narrows to $8 per barrel by the fourth quarter of 2012, as rail and truck capacity is added to the region. EIA's U.S. and world economic growth assumptions have been lowered from last month's Outlook.  World oil-consumption-weighted real GDP grows by 3.1 percent in 2012, compared with 3.5 percent in the previous Outlook. EIA projects that average household heating expenditures for heating oil and propane will increase by 10 percent and 9 percent, respectively, this winter (October 1 to March 31) compared with last winter. Average expenditures for households that heat with oil or propane are forecast to be higher than in any previous winter.  In contrast, natural gas and electricity expenditures are projected to remain close to last year's levels. Regular-grade gasoline retail prices have fallen by 46 cents per gallon from their peak monthly average this year of $3.91 per gallon in May to $3.45 per gallon in October.  This drop in prices results from falling crude oil prices as well as the normal seasonal decline in consumption and the switch in production from summer-grade gasoline to lower-cost winter-grade gasoline.  EIA projects gasoline retail prices to continue to decline, albeit slightly, through the end of the year. Natural gas working inventories ended October 2011 at an estimated 3.8 trillion cubic feet (Tcf), about 1 percent below the same time last year.  The projected Henry Hub natural gas spot price averages $4.09 per million British thermal units (MMBtu) in 2011, $0.30 per MMBtu lower than the 2010 average, and $4.13 per MMBtu in 2012.

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