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EIA forecasts lower WTI crude oil prices US total crude oil production expected to average 6.2 million bpd this year, up 500,000 bpd from 2011 and highest level since 1998 Kristen Nelson Petroleum News
Crude oil prices are dropping and U.S. crude oil production is rising, the U.S. Energy Information Administration said in its May short-term energy forecast, released May 8.
EIA is now forecasting a $110 per barrel U.S. refiner acquisition cost this year, down $2.50 per barrel from the April outlook, and a West Texas Intermediate crude oil price of $104 per barrel this year, down about $2 per barrel from the April outlook.
The WTI price is $9 a barrel higher than the average price last year and the U.S. refiner acquisition cost is about $8 per barrel higher than in 2011. EIA said it expects crude oil prices to remain relatively flat in 2013.
US production highest since 1998 U.S. crude oil production is expected to average 6.2 million barrels per day this year, up 500,000 bpd from 2011 — the highest level of production since 1998, EIA said.
In 2011, U.S. crude oil production increased an estimated 190,000 bpd, 3.4 percent, to 5.66 million bpd, with an increase of 450,000 bpd in Lower 48 onshore production partly offset by a 30,000 bpd decline in Alaska and a 230,000 bpd decline in the federal Gulf of Mexico.
The EIA’s forecast of 6.17 million bpd for this year is up 150,000 bpd from the agency’s April forecast, “and the highest level of production since 1998.”
The agency said the rise in production is driven “by increased oil-directed drilling activity, particularly in onshore tight oil formations,” with the number of oil-directed rigs reported by Baker Hughes up from 777 at the beginning of 2011 to 1,355 on May 4.
The share of U.S. consumption met by liquid imports (including crude oil and products) has been falling since 2005, EIA said, averaging 45 percent in 2011, down from 49 percent in 2010.
The total net import share of U.S. consumption is expected to “continue to decline to 43 percent in 2012 and 42 percent in 2013,” the agency said.
US natural gas increases EIA said total marketed production of natural gas in the U.S. grew by an estimated 4.8 billion cubic feet per day (7.9 percent) in 2011, “driven in large part by increases in shale gas production.”
The agency said it expects year-over-year production to continue to grow this year, but “at a slower rate than in 2011 as low prices reduce new drilling plans.” EIA said Baker Hughes reported a natural gas rig count of 613 at the end of April, the lowest gas-related rig count since 2002, and down from a 2011 high of 936 in mid-October.
EIA attributes a drop in natural gas marketed production from January to February to declining production from less-profitable dry natural gas plays such as the Haynesville Shale being offset by more production from liquids-rich areas such as the Eagle Ford and wet areas of the Marcellus Shale.
Gross pipeline imports are expected to fall by 0.3 bcf per day (3.3 percent) this year as domestic supply displaces Canadian sources, with warm weather in the U.S. adding to the year-over-year decline in imports, particularly in the Northeast.
Gross pipeline exports grew by 1 bcf per day last year, driven by increased exports to Mexico the EIA said, and are expected to continue to grow at a slower rate in 2012 and 2013.
Henry Hub natural gas spot prices averaged $1.95 per million British thermal units in April, down 23 cents per million Btu from March “and the lowest average monthly price since March 1999, which also was the last time the Henry Hub price averaged less than $2 per MMBtu,” EIA said.
The agency said abundant supplies and lower winter heating demand contributed to recent low prices.
EIA said it expects the Henry Hub natural gas price to average $2.45 per million Btu this year and $3.17 in 2013, down from April forecasts of $2.51 and $3.40 per million Btu, respectively.
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