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EIA expects WTI to average $100 in ’12 Agency says market believes 1-in-15 chance June price of WTI will jump to $125; 1-in-50 chance it would exceed $140 a barrel Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Feb. 7 that it expects the price of West Texas Intermediate crude oil to average $100 per barrel this year, almost $6 a barrel higher than in 2011.
But the agency also said that based on recent futures and options data, the market is looking at a 1 in 15 chance that the June price for WTI will exceed $125 per barrel and a 1 in 50 chance that it would exceed $140 a barrel.
The Energy Information Administration, or EIA, said the WTI price discount to other U.S. and world crude oils is narrowing. In discussions in November and December EIA attributed the WTI price discount to a growth in crude oil supply from Canada and North Dakota in the midcontinent region where WTI is traded, without a matching increase in transportation out of the region. A change in direction proposed for the Seaway crude oil pipeline between Texas and the Midwest was expected to allow shipment of oil from Cushing, Okla., to the Gulf Coast, with reversed service expected in the second quarter.
EIA is projecting $104 per barrel for WTI in 2013, with projected average refiner acquisition cost at $105 per barrel this year and $106 per barrel in 2013.
Natural gas at $2.67 The Henry Hub spot price for natural gas averaged $2.67 per million Btu in January, down 50 cents from December.
EIA said the January price is the lowest monthly average since 2002, and attributed the price to “abundant” storage and ample supply.
The agency expects the spot price to begin to recover after the winter inventory draw season ends, and is projecting an average spot price for the year of $3.35 per million Btu, rising to $4.07 in 2013.
Total marketed production of natural gas grew an estimated 4.8 billion cubic feet per day (7.8 percent) last year, “the largest year-over-year volumetric increase in history,” EIA said. The agency attributed the growth to increases in shale gas production and said while it expects production growth to continue through 2013, it expects projected increases to be at a lower rate than in 2011 “as low prices reduce new drilling plans.”
EIA said Baker Hughes reports a natural gas drilling rig count of 745 as of Feb. 3, compared to a 2011 high of 939 in mid-October, but also said that declines in production have not accompanied declines in the rig count, “partly reflecting improved drilling efficiency.”
It is that drilling efficiency, combined with high initial production from new wells, associated gas production from oil drilling and a backlog of uncompleted or unconnected wells, the agency said, that contributes to its forecast of increased production in 2012 and 2013.
EIA said working natural inventories continue to set new seasonal record highs, partly due to the unusually warm winter and resulting lower-than-normal draws on inventory.
US crude production up Domestic crude oil production increased by some 110,000 barrels per day last year to 5.59 million bpd, the EIA said, with a 380,000 bpd increase in Lower 48 production partly offsetting a 40,000 bpd decline in Alaska and a 230,000 bpd decline from the federal Gulf of Mexico.
The agency is forecasting total U.S. crude oil production to increase by 240,000 bpd this year and by another 90,000 bpd in 2013, with increases in Lower 48 onshore crude oil production of 340,000 bpd in 2012 and 110,000 bpd in 2013 more than offsetting declines of 20,000 bpd in each year from Alaska and a 90,000 bpd decline from the Gulf of Mexico this year.
“The rise in production is driven by increased oil-directed drilling activity, particularly in onshore share formations,” EIA said, with Baker Hughes reporting oil-directed onshore rigs at 1,245 on Feb. 3, up from 777 at the beginning of 2011.
Total liquid fuel imports into the U.S. (crude oil and refined products) has been falling since 2005, the agency said, and averaged 45 percent in 2011, “down substantially from 49 percent in 2010.”
EIA said it expects total net import share of consumption may remain near 2011 levels this year and next, “as continued growth in domestic crude oil output exceeds the growth in liquid fuels consumption and total inventory levels stabilize.”
The agency noted that, for the first time since 1949, the U.S. was a net exporter of refined petroleum products last year, with gross product exports averaging 420,000 bpd more than gross product imports. In 2005, EIA noted, product exports were almost 2.5 million bpd less than gross product imports.
EIA said it expects the U.S. to remain a net product exporter, with net product exports expected to average 350,000 bpd this year and 320,000 bpd in 2013.
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