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Short-Term Energy and Summer Fuels Outlook

Release Date: April 8, 2014  |  Next Release Date: May 6, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Prices

Global Crude Oil Prices

Brent crude oil spot prices in March averaged $107/bbl. This was the ninth consecutive month Brent crude oil spot prices averaged between $107/bbl and $112/bbl. The Brent crude oil price is projected to average $105/bbl and $101/bbl in 2014 and 2015, respectively.

The WTI crude oil spot price, which fell to an average of $95/bbl in January 2014, increased to an average of $101/bbl in February and March as a result of strong Midwestern refinery runs and the startup of the Marketlink pipeline moving crude from Cushing to the Gulf Coast. EIA expects that WTI crude oil prices will average $96/bbl in 2014, $1/bbl higher than in last month's STEO, and $90/bbl during 2015. The discount of WTI crude oil to Brent crude oil, which averaged more than $13/bbl from November 2013 through January 2014, fell to an average of nearly $7/bbl in March 2014. EIA expects the discount of WTI crude oil to Brent crude oil to grow in the coming months to an average $9/bbl in 2014 and $11/bbl in 2015, reflecting the economics of transporting and processing the growing production of light sweet crude oil in U.S. and Canadian refineries.

Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the forecast levels (Market Prices and Uncertainty Report). WTI futures contracts for July 2014 delivery, traded during the five-day period ending April 3, 2014, averaged $99/bbl. Implied volatility averaged 17%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in June 2014 at $85/bbl and $115/bbl, respectively. Last year at this time, WTI for July 2013 delivery averaged $96/bbl and implied volatility averaged 18%. The corresponding lower and upper limits of the 95% confidence interval were $82/bbl and $113/bbl.


U.S. Petroleum Product Prices

U.S. Natural Gas Prices

Natural gas spot prices averaged $4.90/MMBtu at the Henry Hub in March, down $1.10/MMBtu from February, as weather in March was less extreme than the previous month, but still colder than normal. EIA projects that spot prices will continue to decline in the spring. Projected Henry Hub natural gas prices average $4.44/MMBtu in 2014 and $4.11/MMBtu in 2015.

Natural gas futures prices for July 2014 delivery (for the five-day period ending April 3, 2014) averaged $4.46/MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for July 2014 contracts at $3.40/MMBtu and $5.87/MMBtu, respectively. At this time last year, the natural gas futures contract for July 2013 averaged $4.07/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $3.16/MMBtu and $5.23/MMBtu.

U.S. Coal Prices

Annual average coal prices to the electric power industry fell for the second consecutive year, from $2.38/MMBtu in 2012 to $2.35/MMBtu in 2013. EIA forecasts average delivered coal prices of $2.35/MMBtu in 2014 and $2.36/MMBtu in 2015.

U.S. Electricity Retail Prices

EIA expects the U.S. residential price of electricity to average 12.4 cents per kilowatthour during 2014, an increase of 2.6% from 2013. Price increases are highest in the New England (7.1%) and Middle Atlantic (4.0%) regions.

Prices
  2012 2013 2014 2015
a West Texas Intermediate.
b Average regular pump price.
c On-highway retail.
d U.S. Residential average.
e Electric power generation fuel cost.
WTI Crude Oila
(dollars per barrel)
94.12 97.91 95.60 89.75
Brent Crude Oil
(dollars per barrel)
111.65 108.64 104.88 100.92
Gasolineb
(dollars per gallon)
3.63 3.51 3.45 3.37
Dieselc
(dollars per gallon)
3.97 3.92 3.85 3.76
Heating Oild
(dollars per gallon)
3.79 3.78 3.81 3.62
Natural Gasd
(dollars per thousand cubic feet)
10.69 10.31 11.07 11.51
Electricityd
(cents per kilowatthour)
11.88 12.12 12.43 12.68
Coale
(dollars per million Btu)
2.38 2.35 2.35 2.36

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