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EIA projects Brent price to average $108 Average spot price for 2012 was $112 per barrel; decrease this year and next reflects increasing supply of non-OPEC liquid fuels Kristen Nelson Petroleum News
Brent crude is expected to average $108 per barrel this year and $101 in 2014, down from $112 in 2012, the U.S. Energy Information Administration said in its April short-term energy outlook, released April 9.
The drop reflects increasing supplies of liquid fuels from non-OPEC countries, the agency said.
The West Texas Intermediate crude oil price is expected to average $94 this year and $92 in 2014, EIA said, compared to $94 in 2012, with the expected 2014 drop in the price discount of WTI to crude reflecting completion of several pipeline projects from the mid-continent to the Gulf Coast in 2014, reducing the cost of transporting crude oil to refiners.
“Continued strong economic growth in the emerging economies, particularly China, could put upward pressure on oil prices, though this would be offset somewhat by Europe’s weak economy,” EIA Administrator Adam Sieminski said in comments on the agency’s outlook.
Henry Hub to rise EIA said the Henry Hub natural gas spot price is expected to average $3.52 per million British thermal units this year, increasing to $3.60 per million Btu in 2014, up from $2.75 per million Btu last year.
The March price averaged $3.81 per million Btu, up nearly 48 cents from the average of the three previous months, $3.33.
EIA said it expects U.S. natural gas consumption to average 70.3 billion cubic feet per day this year, and 70.1 bcf per day in 2014.
“Forecasts for closer-to-average winter temperatures in 2013 and 2014 (compared with the record-warm temperatures in 2012) will lead to increases in natural gas used for residential and commercial space heating,” the agency said.
The agency projects U.S. natural gas marketed production to increase from 69.1 bcf per day in 2012 to 69.3 bcf per day this year and 69.4 bcf in 2014, with onshore production increasing slightly while federal Gulf of Mexico production declines.
Crude consumption growth World liquid fuels consumption grew by 700,000 barrels per day in 2012, reaching 89 million bpd, EIA said, with higher growth expected this year and next “due to a moderate recovery in global economic growth” and expected to reach 90 million bpd this year and 91.3 million bpd in 2014.
The leading regional contributor to projected consumption growth is non-OECD Asia, with liquid fuels consumption in China estimated to have increased by 380,000 bpd last year and projected to increase by 450,000 bpd in 2013 and by 510,000 bpd in 2014.
Liquid fuels consumption in Organization for Economic Cooperation and Development countries fell by 600,000 bpd in 2012, EIA said, and projected to decline by an additional 400,000 bpd this year and 200,000 bpd in 2014 “because of declining consumption in Europe.”
Non-OPEC supply increasing EIA said non-OPEC liquids production is projected to increase by 1.1 million bpd this year and by another 1.6 million bpd in 2014.
“North America accounts for almost all of the projected growth in non-OPEC supply over the next two years because of continued production growth from U.S. tight oil formations and Canadian oil sands,” the agency said.
Crude oil production from OPEC member countries, particularly Saudi Arabia, declined in the fourth quarter of 2012, EIA said, with Saudi Arabia estimated to have cut production from an average of 9.9 million bpd in the third quarter of 2012 to 9 million bpd in the first quarter of 2013.
The agency is projecting OPEC supply to fall by 400,000 bpd this year and then rise by 500,000 bpd in 2014.
“Most of the decline in 2013 comes from Saudi Arabia, in response to non-OPEC supply growth, while Iraq and Angola account for most of the increase in 2014,” EIA said.
Lower US imports U.S. crude oil gross imports have been dropping due to growing domestic crude oil production, with the 8.5 million bpd imported in 2012 the lowest volume since 1997. EIA said it “expects that U.S. crude oil production will exceed U.S. crude oil gross imports as early as the end of 2013, the first time this will have occurred since February 1995.”
U.S. crude oil production is expected to continue to grow rapidly over the next two years, EIA said, from an average of 6.5 million bpd last year to 7.3 million bpd this year and 7.9 million bpd in 2014.
“Drilling in tight oil plays in the onshore Williston, Western Gulf, and Permian basins is expected to account for the bulk of forecast production growth over the next two years,” the agency said.
U.S. liquid fuel net imports, including crude and petroleum products, peaked in 2005 at 12.5 million bpd, fell to 7.4 million bpd in 2012 and is expected to fall to an average of 6 million bpd by 2014, EIA said.
The total of U.S. consumption met by liquid fuel net imports was more than 60 percent in 2005, falling to an average of 40 percent last year and EIA said it expects net import share to fall to 32 percent in 2014, the lowest level since 1985.
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