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Same range for Brent crude for 10th month EIA: spot price averaged $108 per barrel in April; average stays between $107, $112/barrel; US crude 8.3M barrels per day Kristen Nelson Petroleum News
The Brent crude oil spot price averaged $108 per barrel in April, the 10th consecutive month in which the average price was between $107 and $112 per barrel, the U.S. Energy Information Agency said in its May Short-Term Energy Outlook.
EIA also said new pipeline capacity from the Midwest to the Gulf Coast helped reduce inventories at the Cushing, Oklahoma, storage hub to 25 million barrels by the end of April, the lowest level there since October 2009.
The discount of West Texas Intermediate crude oil to Brent was down. It had averaged more than $13 a barrel from November through January, but fell below $4 per barrel in early April.
U.S. commercial crude oil stocks reached a record high of nearly 400 million barrels at the end of April, which EIA said “is expected to put downward pressure on crude oil prices.”
The agency is projecting the Brent spot oil price to average $106 per barrel this year and $102 per barrel in 2015, with the WTI discount to Brent averaging $10 per barrel this year and $11 per barrel in 2015, “reflecting the economics of transporting and processing the growing production of high API gravity (very light) sweet crude oil in the United States.”
EIA said the January startup of TransCanada’s Marketlink pipeline, moving crude oil from Cushing to the Gulf Coast, along with strong refinery runs, contributed to an increase in the WTI crude oil spot from a January average of $94 per barrel to $102 per barrel in April;
US crude production “U.S. crude oil production averaged an estimated 8.3 million barrels per day in April, the highest level for any month in 26 years,” EIA Administrator Adam Sieminski said in a statement. “EIA expects oil production growth, primarily from increased output in the tight oil formations in North Dakota and Texas, to continue through 2015,” he said, with Gulf of Mexico oil production expected to rise both this year and next, “marking the first increase in offshore oil production in five years.”
U.S. crude oil production averaged 7.4 million bpd in 2013 and is expected to increase to an average of 8.5 million bpd this year and 9.2 million bpd in 2015, EIA said, with the 2015 forecast of 9.2 million bpd representing “the highest annual average level of production since 1972.”
Sieminski said the share of U.S. fuel demand met by net imports reached 60 percent in 2005 and is expected to fall to 23 percent in 2015, “the lowest level since 1970.”
The increase in Gulf of Mexico production reflects new wells in the Mars field producing ahead of schedule. Also in the Gulf, production from the Olympus platform and Mars B infrastructure, the first major expansion of the Mars field, is expected to reach 100,000 bpd in 2015.
EIA is projecting U.S. federal Gulf of Mexico production, which has been falling for the last four years, to increase by 150,000 bpd this year and by an additional 240,000 bpd in 2015.
Natural gas EIA said it expects domestic natural gas marketed production to grow by an average of 3 percent this year and 1.8 percent in 2015.
“Rapid natural gas production growth in the Marcellus formation is contributing to falling natural gas forward prices in the Northeast, which often fall even with or below Henry Hub prices outside of peak winter demand months,” the agency said, which may cause some drilling activity to move away from the Marcellus back to Gulf Coast plays where prices are closer to the Henry Hub spot price.
Liquefied natural gas imports have been declining because of higher prices in Europe and Asia, and companies are planning to build liquefaction facilities for export, with Cheniere Energy’s Sabine Pass facility expected to be the first to liquefy Lower 48 natural gas for export, coming online in stages beginning in late 2015, EIA said.
Natural gas spot prices averaged $4.66 per million Btu at Henry Hub in April, down 24 cents from March, and EIA said it projects that spot prices will continue to decline through the spring and summer. The agency projects natural gas to average $4.74 per million Btu this year and $4.33 in 2015.
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