Prices

Global Crude Oil Prices

Concerns over global economic growth, seasonal declines in international refinery runs, and increases in North Sea oil production have contributed to a drop in Brent crude oil prices from $109 per barrel on April 1 to a low of $97 per barrel on April 17. EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $106 per barrel and $101 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 August 2013 delivery traded during the five-day period ending May 2, 2013 averaged $93.41 per barrel. Implied volatility averaged 22 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in August 2013 at $77 per barrel and $113 per barrel, respectively. Last year at this time, WTI for August 2012 delivery averaged $105 per barrel and implied volatility averaged 23 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $86 per barrel and $130 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, about $0.10 per gallon lower than forecast in last month's STEO. The projected monthly average regular retail gasoline price falls from $3.57 per gallon in April to $3.48 per gallon in September. Diesel fuel prices, which averaged $3.95 per gallon last summer, are projected to fall to an average of $3.88 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 August 2013 delivery traded over the five-day period ending May 2 averaged $2.73 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 August 2013 is about 11 percent.

U.S. Natural Gas Prices

Natural gas spot prices averaged $4.17 per MMBtu at the Henry Hub in April 2013, up 36 cents from the $3.81-per-MMBtu average seen the previous month. EIA expects the Henry Hub price will increase from an average of $2.75 per million Btu in 2012 to $3.80 per MMBtu in 2013 and $4.00 per MMBtu in 2014.

Natural gas futures prices for August 2013 delivery (for the five-day period ending May 2, 2013) averaged $4.34 per MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95-percent confidence interval for August 2013 contracts at $3.22 per MMBtu and $5.84 per MMBtu, respectively. At this time a year ago, the natural gas futures contract for August 2012 averaged $2.46 per MMBtu and the corresponding lower and upper limits of the 95-percent confidence interval were $1.52 per MMBtu and $3.96 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 $2.40 per MMBtu in 2013 and $2.44 per MMBtu in 2014.

U.S. Electricity Retail Prices

After an increase of 1.4 percent during 2012, EIA expects U.S. retail residential electricity prices will grow by 2.6 percent in 2013 and by 2.3 percent in 2014.