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EIA projects Brent to weaken in ’14, ’15 Expects strong domestic crude oil production growth continuing through 2015, to 7.4 million bpd in 2014, 8.4 million bpd in 2015 Kristen Nelson Petroleum News
The U.S. Energy Information Administration is projecting the Brent crude oil price to weaken as supply growth exceeds growth in demand.
In its February Short-Term Energy Outlook the agency said the Brent crude oil spot price, which averaged between $108 and $112 a barrel for the fourth consecutive month in January, is expected to average $105 a barrel this year and $101 a barrel in 2015.
Growth in crude oil supply is from non-Organization of the Petroleum Exporting Countries sources, EIA said.
The West Texas Intermediate spot oil price, which averaged $94 per barrel in November and $98 per barrel in December “because of strong U.S. refinery oil runs,” averaged $95 per barrel in January. WTI is projected to average $93 this year and $90 per barrel in 2015.
The discount of WTI to Brent averaged $18 in 2012, fell below $4 per barrel in July 2013 and averaged $14 per barrel in January. EIA said it expects the discount to average $11 over 2014-15, “reflecting the economics of transporting and processing the growing production of light sweet crude oil in U.S. and Canadian refineries.”
Strong domestic crude growth EIA said it expects strong growth in domestic crude oil production, primarily in the Bakken, Eagle Ford, and Permian regions, continuing through 2015.
Estimated U.S. crude oil production was 7.4 million barrels per day in 2013 and is projected to grow to 8.4 million bpd this year and to 9.2 million bpd in 2015. Both 2014 and 2015 production was revised downward from the agency’s January forecast “because of indications that severe weather this winter has caused temporary slowdowns in completing new wells.”
The U.S. high for production was 9.6 million bpd in 1970.
Bakken production averaged 880,000 bpd in 2013 and surpassed 1 million bpd in December. Eagle Ford production in South Texas exceeded 1 million bpd in May and reached an estimated 1.22 million bpd in December, the agency said.
Production in the U.S. federal Gulf of Mexico averaged 1.25 million bpd in 2013, down slightly from 2012, and EIA said it is forecasting 1.38 million bpd from the Gulf of Mexico in 2014 and 1.59 million bpd in 2015.
2005 was the peak for share of U.S. liquid fuels consumption met by net imports, reaching 60 percent, falling to 35 percent last year.
EIA is projecting a net import share of 25 percent in 2015, the lowest level since 1971.
Natural gas Domestic natural gas consumption is expected to average 70.2 billion cubic feet per day this year, EIA said, an upward revision of 0.8 bcf per day from January, largely attributable to an increase in January consumption.
The agency expects natural gas marketed production to grow 2.2 percent in 2014 and 1.2 percent in 2015.
Liquefied natural gas imports have been declining for several years because higher prices in Europe and Asia are attracting sellers. Growing domestic production has replaced pipeline imports from Canada, EIA said, although exports to Mexico have increased, trends expected to continue through 2015.
Natural gas spot prices averaged $4.71 per million British thermal units at Henry Hub in January, up 47 cents per million Btu from December, due to “bitterly cold weather” in January. The agency said it expects price increases seen in the past few months to reverse with the end of winter.
Henry Hub prices are expected to average $4.17 per million Btu this year and $4.11 per million Btu in 2015.
Natural gas working inventories fell by 262 bcf to 1.923 trillion cubic feet at the end of January as colder-than-normal temperatures resulted in greater heating demand and larger-than-normal withdrawals. A new record high monthly withdrawal in January surpassed the previous high set in December.
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