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EIA projects $98 Brent in fourth quarter Spot price below $100 per barrel for first time in more than 2 years driven by weakening global demand, higher Libyan oil exports Kristen Nelson Petroleum News
North Sea Brent crude oil spot prices averaged $97 per barrel in September, the first time that price has fallen below $100 in more than two years, the U.S. Energy Information Administration said Oct. 7 in its Short-Term Energy and Winter Fuels Outlook.
EIA said the $97 Brent spot price in September was down $5 from August and the first time Brent has averaged less than $100 a barrel since June 2012.
“Brent crude oil prices were driven downward in large part because of weakening global oil demand and higher Libyan oil exports,” the agency said. EIA is forecasting Brent to average $98 per barrel in the fourth quarter. The annual forecast has been lowered $2 from last month to $104 per barrel for 2014, and lowered $1 a barrel to $102 in 2015.
The West Texas Intermediate crude oil spot price fell from an average of $97 per barrel in August to $93 per barrel in September, EIA said. The WTI discount to Brent averaged $11 per barrel in 2013 and the agency said it expects that discount to average $7 per barrel both this year and next.
“High refinery runs contributed to the discount of WTI crude oil to Brent crude oil falling from an average of $8/bbl during the first half of this year to an average of $4/bbl in the third quarter,” EIA said. The agency expects WTI to average $91 per barrel in the fourth quarter and $95 in 2015.
US production grows U.S. crude oil production is continuing to grow, averaging 8.7 million barrels per day in September, EIA said, the highest monthly production since July 1986.
The agency is forecasting a 2014 domestic average of 8.5 million bpd and 9.5 million bpd in 2015; U.S. annual average production peaked at 9.6 million bpd in 1970.
Gulf of Mexico oil production is projected to increase from 1.3 million bpd in 2013 to 1.6 million bpd in 2015, with 11 projects starting this year, six in the first half of the year, EIA said.
Domestic production growth has contributed to a significant decline in imports, with the share of U.S. liquid fuels consumption from imports falling from 60 percent in 2005 to 33 percent last year and expected to decline to 20 percent next year, which would be the lowest level since 1968, the agency said.
Natural gas Domestic natural gas consumption is expected to average 72.5 billion cubic feet per day this year, up 1.6 percent from 2013, with the industrial sector leading the growth. Natural gas consumption is expected to increase 0.3 percent in 2015, “as continued industrial sector growth and higher electric power sector consumption offset lower residential and commercial consumption,” EIA said.
Natural gas marketed production is expected to grow by 5.4 percent this year and by 2 percent in 2015, with strong increases already seen in the Lower 48 expected to continue, offsetting declines in the Gulf of Mexico, EIA said, with marketed production 4.2 bcf per day greater in July - the most recent month for which data is available - compared to July 2013.
With growing domestic production, EIA said it expects continued downward pressure on imports from Canada and growth in exports to Mexico, particularly from the Eagle Ford, “because of growing demand from Mexico’s electric power sector and flat Mexican production.”
LNG imports to the U.S. have been down for four years because of higher prices in Europe and Asia.
“LNG exports are still a very small part of the total picture, however, and overall the United States will remain a net importer of natural gas because of pipeline imports from Canada,” the agency said.
The Henry Hub natural gas spot price averaged $3.92 per million Btu in September, EIA said, up slightly from August, and is expected to average $4.45 this year and $3.84 in 2015.
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