Prices

Global Crude Oil Prices

After declining to a 2013 year-to-date low of $97 per barrel on April 17, Brent crude oil spot prices increased to an average of $103 per barrel in May. EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $105 per barrel and $100 per barrel in 2013 and 2014, respectively, reflecting the increasing supply of liquid fuels from non-OPEC countries. After averaging $94 per barrel in 2012, the forecast WTI crude oil spot price averages $93 per barrel in 2013 and $92 per barrel in 2014. By 2014, several pipeline projects from the midcontinent to the Gulf Coast refining centers are expected to come on line, reducing the cost of transporting crude oil to refiners, which is reflected in a narrowing in the price discount of WTI to Brent.

Energy price forecasts are highly uncertain (Market Prices and Uncertainty Report). WTI futures contracts for September 2013 delivery traded during the five-day period ending June 6, 2013 averaged $93.75 per barrel. Implied volatility averaged 23 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in September 2013 at $77 per barrel and $114 per barrel, respectively. Last year at this time, WTI for September 2012 delivery averaged $85 per barrel and implied volatility averaged 35 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $63 per barrel and $115 per barrel.

U.S. Petroleum Product Prices

EIA expects that regular-grade gasoline retail prices, which averaged $3.69 per gallon last summer, will average $3.53 per gallon during the current summer (April through September) driving season. The projected monthly average regular retail gasoline price falls from $3.61 per gallon in May to $3.43 per gallon in September. Diesel fuel prices, which averaged $3.95 per gallon last summer, are projected to average $3.83 per gallon this summer. Daily and weekly national average prices can differ significantly from monthly and seasonal averages, and there are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 30 cents per gallon or more.

As is the case with crude oil, the market's expectation of uncertainty in monthly average gasoline prices is reflected in the pricing and implied volatility of futures and options contracts. New York Harbor RBOB futures contracts for September 2013 delivery traded over the five-day period ending June 6 averaged $2.76 per gallon. The probability that the RBOB futures price will exceed $3.10 per gallon (consistent with a U.S. average regular gasoline retail price above $3.75 per gallon) in September 2013 is about 12 percent.

U.S. Natural Gas Prices

Natural gas spot prices averaged $4.04 per MMBtu at the Henry Hub in May 2013, down 13 cents from the $4.17-per-MMBtu average seen the previous month. EIA expects the Henry Hub price will increase from an average of $2.75 per MMBtu in 2012 to $3.92 per MMBtu in 2013 and $4.10 per MMBtu in 2014.

Natural gas futures prices for September 2013 delivery (for the five-day period ending June 6, 2013) averaged $3.97 per MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95-percent confidence interval for September 2013 contracts at $3.03 per MMBtu and $5.21 per MMBtu, respectively. At this time a year ago, the natural gas futures contract for September 2012 averaged $2.48 per MMBtu and the corresponding lower and upper limits of the 95-percent confidence interval were $1.51 per MMBtu and $4.07 per MMBtu.

U.S. Coal Prices

Delivered coal prices to the electric power industry increased steadily over a 12-year period through 2012, when the delivered coal price averaged $2.40 per MMBtu. EIA forecasts average delivered coal prices of $2.36 per MMBtu in 2013 and $2.40 per MMBtu in 2014.

U.S. Electricity Retail Prices

The U.S. residential electricity price averaged 11.9 cents per kWh in 2012. EIA expects the average residential price will grow by 1.1 percent in 2013 and by 1.9 percent in 2014. The residential price during the summer months this year (June-August) is expected to average 12.3 cents/kWh, a 2.2-percent increase from the price last summer.