Forecast Highlights

 

Global Liquid Fuels

  • Implied global petroleum and liquid fuels inventories are estimated to have increased by 0.8 million barrels per day (b/d) in 2016. The Energy Information Administration (EIA) expects the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million b/d in 2017 and builds averaging 0.2 million b/d in 2018. The revised forecast, which reduces average inventory builds from last month’s outlook, resulted from changes to estimates of historical global liquid fuels consumption that created a higher base for consumption during recent years and the forecast period. See International Data Revisions and the STEO Forecast for more about this change.
  • U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S crude oil production is forecast to average 9.0 million b/d in 2017 and 9.5 million b/d in 2018.
  • Benchmark North Sea Brent crude oil spot prices averaged $55 per barrel (/b) in January, a $1/b increase from December. This price was $24/b higher than the January 2016 average, and it was the highest monthly average for Brent spot prices since July 2015.
  • EIA forecasts Brent crude oil prices to average $55/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average about $1/b less than Brent prices in 2017. The New York Mercantile Exchange (NYMEX) contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a range from $45/b – $65/b encompasses the market expectation of WTI prices in April 2017 at the 95% confidence level.
  • U.S. regular gasoline retail prices are expected to decrease from an average of $2.35 per gallon (/gal) in January 2017 to an average of $2.27/gal in February, and then rise to $2.33/gal in March. U.S. regular gasoline retail prices are forecast to average $2.39/gal in 2017 and $2.44/gal in 2018.

 

 

 

 

Natural Gas

  • U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.3 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, which was the first decline since 2005. Natural gas production in 2018 is forecast to increase by an average of 4.1 Bcf/d from the 2017 level.
  • In January, average Henry Hub natural gas spot prices fell by 29 cents per million British thermal units (MMBtu) from December levels to $3.30/MMBtu. Mild January temperatures, which were the warmest since 2006, contributed to lower prices.
  • Increasing capacity for natural gas-fired electric generation, growing domestic natural gas consumption and new export capabilities contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.43/MMBtu in 2017 to $3.70/MMBtu in 2018. NYMEX contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a price range from $2.42/MMBtu to $4.38/MMBtu encompasses the market expectation of Henry Hub natural gas prices in April 2017 at the 95% confidence level.