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EIA ups projection for Brent crude oil Price expected to average $112 per barrel this year, $103 in 2013, both about 3 percent higher than agency forecast in August Kristen Nelson Petroleum News
The U.S. Energy Information Administration has upped its projection for Brent crude oil spot prices and now expects Brent to average $112 per barrel this year and $103 in 2013, both increases of about 3 percent from its August projections.
In its Short-Term Energy Outlook, issued Sept. 11, EIA noted that Brent crude oil spot prices “have increased at a relatively steady pace” from a 2012 low of $89 per barrel on June 25 to a recent high on Aug. 23 of $117 per barrel, attributing the increase to “seasonal tightening of oil markets and continuing unexpected production outages.”
The agency said it expects Brent to fall over the remainder of the year and to average $111 per barrel over the last quarter of the year.
West Texas Intermediate spot prices rose “by a more modest” rate, $17 per barrel between June 25 and Aug. 23, EIA said, “as the WTI discount to Brent crude oil widened from $10 per barrel to $22 per barrel.” The agency said it expects WTI to average $93 per barrel in the second half of the year and the WTI discount to Brent, while averaging $17 per barrel in the fourth quarter, to narrow to $9 per barrel by the end of 2013.
Domestic production up U.S. crude oil production is expected to average 6.3 million barrels per day in 2012, up 700,000 bpd from last year, EIA said, with next year’s domestic production expected to increase to 6.8 million bpd, the highest domestic production since 1993.
North America represents the largest area of non-Organization of the Petroleum Exporting Countries production growth, up 1 million bpd this year and 600,000 bpd in 2012, “due to continued production from U.S. onshore shale and other tight formations and from Canadian oil sands,” EIA said.
Overall, the agency expects non-OPEC liquids fuels production to rise by 500,000 bpd this year and by a further 1.2 million bpd in 2013.
In other non-OPEC production, EIA expects Kazakhstan to begin commercial production from the Kashagan field in 2013, increasing its total production by 160,000 bpd; increases are also expected from Brazil’s offshore, pre-salt oil fields.
Other countries with expected rises in production include Columbia, Russia and China, while production is expected to decline over the same two-year period in Mexico and the North Sea.
Natural gas prices down U.S. spot prices for natural gas averaged $2.84 per million Btu at Henry Hub in August, down 11 cents per million Btu from the July average and down $1.21, 30 percent, from the August 2011 average, EIA said.
Henry Hub averaged $4 per million Btu in 2011, is expected to average $2.65 this year and $3.34 in 2013.
“Working natural gas inventories remain at historically high levels for this time of year,” EIA said, a total of 3,402 billion cubic feet on Aug. 31, 395 bcf more than last year’s level and 329 bcf above the five-year average.
EIA said it expects inventory levels at the end of October to set a new record of 3,950 bcf.
Total marketed production of domestic natural gas grew by 4.8 bcf per day, 7.9 percent, in 2011, “driven in large part by increases in shale gas production,” the agency said.
Year-over-year, EIA expects a growth of 2.6 bcf per day this year, although there should be a small production drop over the next few months, reflecting losses from hurricanes and a recent drop in the rig count. EIA said Baker Hughes reported a natural gas rig count of 452 as of Sept. 7, compared to 811 at the start of the year.
U.S. natural gas consumption is expected to average 69.8 bcf per day this year, up 3.2 bcf, 4.8 percent, from 2011. “Large gains in electric power use in 2012 more than offset declines in residential and commercial use,” EIA said.
Total natural gas consumption is projected to increase by 0.2 bcf per day, 0.2 percent, in 2013, with expected increases in residential, commercial and industrial consumption offsetting expected declines in the electric power sector.
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