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Henry Hub gas to average $4.44 this year EIA says natural gas averaged $3.73 per million Btu in 2013; Brent averaged near $110 per barrel in March for 9th consecutive month Kristen Nelson Petroleum News
The U.S. Energy Information Administration says the North Sea Brent crude oil spot price averaged $107 per barrel in March, the ninth consecutive month it has averaged between $107 and $112 a barrel. EIA said in its April short-term energy outlook that Brent is projected to average $105 per barrel this year and $101 per barrel in 2015.
The West Texas Intermediate crude oil price, which fell to an average of $95 in January, averaged $101 per barrel in February and March “as a result of strong Midwestern refinery runs and the startup of the Marketlink pipeline moving crude from Cushing to the Gulf Coast,” the agency said. EIA expects WTI to average $96 per barrel in 2014 and $90 per barrel in 2015.
The discount of WTI to Brent averaged more than $13 per barrel from November through January and fell to nearly $7 per barrel in March. EIA said it expects the discount of WTI to Brent to grow to an average of $9 per barrel this year and $11 per barrel in 2015, “reflecting the economics of transporting and processing the growing production of light sweet crude oil in U.S. and Canadian refineries.”
Henry Hub natural gas spot prices averaged $4.90 per million Btu in March, down $1.10 from February as the weather warmed, EIA said. The agency expects the Henry Hub spot price to continue to decline in the spring and projects it will average $4.44 per million Btu this year and $4.11 in 2015.
Crude supply grows Liquids production from non-Organization of the Petroleum Exporting Countries grew by 1.3 million barrels per day in 2013, averaging 54 million bpd, EIA said.
The agency forecasts that production from the United States and Canada will grow by a combined annual average of 1.4 million bpd this year and by 1.2 million bpd in 2015, while production in the Former Soviet Union will rise by 160,000 bpd, led by Russia in 2014 and Kazakhstan in 2015.
OPEC crude oil production averaged 30 million barrels in 2013, down 900,000 bpd from 2012. EIA said it is projecting OPEC crude oil production to drop by 200,000 bpd in both 2014 and 2015, “as a result of supply disruptions in OPEC and cutbacks in crude oil production to accommodate increased supplies in non-OPEC countries.”
In the U.S., EIA expects strong crude oil production growth, primarily in the Bakken, Eagle Ford and Permian, continuing through 2015, with U.S. production forecast to increase from an estimated 7.4 million bpd in 2013 to 8.4 million bpd in 2014 and 9.1 million bpd in 2015.
EIA said the highest historical annual average production level in the U.S. was 9.6 million bpd in 1970.
Bakken production averaged 900,000 bpd in 2013 and Eagle Ford production averaged 1.1 million bpd.
Low level of natural gas storage Working natural gas in storage ended March at an estimated 875 billion cubic feet, EIA said, the lowest level in 11 years. The agency projects a large rebuild over the injection season with inventories at the end of October expected to be 3.422 trillion cubic feet, “a record build” of nearly 2.6 tcf.
U.S. natural gas consumption is expected to average 72.1 bcf per day this year, up 0.7 bcf from 2013, with increased residential, commercial and industrial use offsetting declines from the electric power sector related to higher natural gas prices.
EIA expects marketed natural gas production to grow by 3 percent in 2014 and 1 percent in 2015, with rapid natural gas production growth in the Marcellus contributing to falling natural gas prices in the Northeast which may result in some drilling activity moving “away from the Marcellus back to Gulf Coast plays such as the Haynesville and Barnett, where prices are closer to the Henry Hub spot price.”
Liquefied natural gas imports have been declining as higher prices in Europe and Asia are more attractive to sellers than relatively lower U.S. prices. EIA also said that growing domestic production has displaced some natural gas pipeline imports from Canada while exports to Mexico have increased.
The agency projects net imports of 3.7 bcf per day in 2014 and 3 bcf in 2015, which would be the lowest level since 1987, and expects that beginning in 2018 the U.S. will be a net exporter of natural gas.
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