EIA Short-Term Energy Outlook

Release Date: June 12, 2018

Brent crude oil spot prices averaged $77 per barrel (b) in May, an increase of $5/b from the April level and the highest monthly average price since November 2014. EIA forecasts Brent spot prices will average $71/b in 2018 and $68/b in 2019. The 2019 forecast price is $2/b higher than in the May STEO. EIA expects West Texas Intermediate (WTI) crude oil prices will average almost $7/b lower than Brent prices in 2018 and $6/b lower than Brent prices in 2019. NYMEX WTI futures and options contract values for September 2018 delivery traded during the five-day period ending June 7, 2018, suggest a range of $52/b to $81/b encompasses the market expectation for September WTI prices at the 95% confidence level.

For the 2018 April–September summer driving season, EIA forecasts U.S. regular gasoline retail prices to average $2.87/gallon (gal), up from an average of $2.41/gal last summer. The higher forecast gasoline prices are primarily the result of higher forecast crude oil prices. Monthly average gasoline prices are expected to reach a summer peak in June of $2.92/gal and are forecast to decline gradually afterwards to $2.84/gal in September.

EIA estimates that U.S. crude oil production averaged 10.7 million barrels per day (b/d) in May, up 80,000 b/d from the April level. EIA projects that U.S. crude oil production will average 10.8 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.8 million b/d in 2019.

EIA forecasts that total U.S. crude oil and petroleum product net imports will fall from an annual average of 3.7 million b/d in 2017 to an average of 2.5 million b/d in 2018 and to 1.6 million b/d in 2019, which would be the lowest level of net oil imports since 1959.

EIA forecasts crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) will average 32.0 million b/d in 2018, a decrease of 0.4 million b/d from the 2017 level. OPEC crude oil production is expected to increase slightly to an average of 32.1 million b/d in 2019. The increase in production in 2019 is expected to occur despite falling production in Venezuela and Iran. EIA assumes these decreases will be offset by increasing production from Persian Gulf producers, primarily Saudi Arabia.

U.S. dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017. EIA forecasts dry natural gas production will average 81.2 Bcf/d in 2018, establishing a new record. EIA expects natural gas production will rise again in 2019 to 83.8 Bcf/d. .

Growing forecast U.S. natural gas production supports increasing forecast liquefied natural gas (LNG) exports. LNG exports averaged 1.9 Bcf/d in 2017. EIA forecasts LNG exports to average 3.0 Bcf/d in 2018 and 5.1 Bcf/d in 2019. Dominion Energy’s Cove Point LNG facility is ramping up exports. In April, the facility exported an estimated 13.4 Bcf, implying baseload utilization of 65%, and in May, it exported an estimated 23.5 Bcf, implying baseload utilization of 94%.

EIA expects Henry Hub natural gas spot prices to average $2.99/million British thermal units (MMBtu) in 2018 and $3.08/MMBtu in 2019. NYMEX futures and options contract values for September 2018 delivery that traded during the five-day period ending June 7, 2018, suggest that a range of $2.38/MMBtu to $3.57/MMBtu encompasses the market expectation for September Henry Hub natural gas prices at the 95% confidence level.