EIA: BRENT OIL: $102/BBL IN 2015
EIA projects average U.S. household expenditures for natural gas, heating oil, electricity, and propane will decrease this winter heating season (October 1 through March 31) compared with last winter, which was 11% colder than the previous 10-year average nationally. Projected average household expenditures for propane and heating oil are 27% and 15% lower, respectively, because of lower heating demand and prices. Lower heating demand and higher prices contribute to natural gas and electricity expenditures that are 5% and 2% lower than last winter.
Driven in large part by falling crude oil prices, U.S. regular gasoline retail prices fell to an average of $3.41/gallon (gal) in September, 29 cents below the June average. U.S. regular gasoline retail prices are projected to continue to decline to an average of $3.14/gal in December. EIA expects U.S. regular gasoline retail prices, which averaged $3.51/gal in 2013, to average $3.45/gal in 2014 and $3.38/gal in 2015.
Weakening global demand helped North Sea Brent crude oil spot prices fall to an average of $97 per barrel (bbl) in September, the first month Brent prices have averaged below $100/bbl in more than two years. EIA projects that Brent crude oil prices will average $98/bbl in fourth-quarter 2014 and $102/bbl in 2015. The WTI discount to Brent, which averaged $11/bbl in 2013, is expected to average $7/bbl in both 2014 and 2015.
Total U.S. crude oil production averaged an estimated 8.7 million barrels per day (bbl/d) in September, the highest monthly production since July 1986. Total crude oil production, which averaged 7.4 million bbl/d in 2013, is expected to average 9.5 million bbl/d in 2015. If realized, the 2015 forecast would be the highest annual average crude oil production since 1970. Natural gas plant liquids production is expected to increase from an average of 2.6 million bbl/d in 2013 to 3.2 million bbl/d in 2015.
Natural gas working inventories on September 26 totaled 3.10 trillion cubic feet (Tcf), 0.37 Tcf (11%) below the level at the same time a year ago and 0.40 Tcf (11%) below the previous five-year average (2009-13). Projected natural gas working inventories reach 3.53 Tcf at the end of October, 0.28 Tcf below the level at the same time last year. Despite the lower stocks at the start of this winter's heating season, EIA expects the Henry Hub natural gas spot price to $4.00/million British thermal units (MMBtu) this winter compared with $4.53/MMBtu last winter. This price forecast reflects both lower expected heating demand and significantly higher natural gas production this winter.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.