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Short-Term Energy and Winter Fuels Outlook

Release Date: October 7, 2014  |  Next Release Date: November 12, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Prices

Global Crude Oil Prices

North Sea Brent crude oil spot prices averaged $97/bbl in September, a decrease of $5/bbl from August and the first month Brent crude oil prices have averaged below $100/bbl since June 2012. Brent crude oil prices were driven downward in large part because of weakening global oil demand and higher Libyan oil exports (EIA, This Week in Petroleum, September 24, 2014). The forecast Brent crude oil price averages $104/bbl in 2014 and $102/bbl in 2015, $2/bbl lower and $1/bbl lower than projected in last month's STEO, respectively.

The monthly average WTI crude oil spot price fell from an average of $97/bbl in August to $93/bbl in September. High refinery runs contributed to the discount of WTI crude oil to Brent crude oil falling from an average of $8/bbl during the first half of this year to an average of $4/bbl in the third quarter. EIA now expects WTI crude oil prices to average $91/bbl in the fourth quarter of 2014 and $95/bbl in 2015. The discount of WTI to Brent crude oil is forecast to widen from current levels, averaging $7/bbl in the fourth quarter of 2014 and in 2015.

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 January 2015 delivery, traded during the five-day period ending October 2, averaged $91/bbl. Implied volatility averaged 19%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in January 2015 at $76/bbl and $107/bbl, respectively. Last year at this time, WTI for January 2014 delivery averaged $102/bbl and implied volatility averaged 20%. The corresponding lower and upper limits of the 95% confidence interval were $85/bbl and $121/bbl.

Petroleum Product Prices

Monthly average regular gasoline retail prices fell from $3.69/gal in June to $3.41/gal in September. EIA expects average regular gasoline retail prices to continue falling to $3.14/gal in December. The U.S. annual average regular gasoline retail price, which averaged $3.51/gal in 2013, is projected to average $3.45/gal in 2014 and $3.38/gal in 2015. Diesel fuel prices, which averaged $3.92/gal in 2013, are projected to fall to an average of $3.85/gal in 2014 and $3.80/gal in 2015. 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 falling above or below the national average price by $0.30/gal or more.

Natural Gas Prices

The Henry Hub natural gas spot price averaged $3.92/MMBtu in September, a slight increase from August. EIA expects spot prices to remain below $4.00/MMBtu through November, before rising with winter heating demand. Projected Henry Hub natural gas prices average $4.45/MMBtu in 2014 and $3.84/MMBtu in 2015.

Natural gas futures prices for January 2015 delivery (for the five-day period ending October 2) averaged $4.19/MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for December 2014 contracts at $2.96/MMBtu and $5.94/MMBtu, respectively. At this time last year, the natural gas futures contract for January 2014 averaged $3.83/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $2.91/MMBtu and $5.04/MMBtu.

Coal Prices

Annual average coal prices to the electric power industry fell from $2.39/MMBtu in 2011 to $2.35/MMBtu in 2013. EIA expects the average delivered coal prices to be $2.36/MMBtu in 2014 and remain at that level in 2015.

Electricity Retail Prices

EIA expects the U.S. residential price to average 12.5 cents per kilowatthour in 2014, which is 3.0% higher than the average last year. Prices increase in all regions of the country except along the Pacific Coast. Average U.S. residential electricity prices grow at a slower rate of 1.7% in 2015.

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 97.72 94.58
Brent Crude Oil
(dollars per barrel)
111.65 108.64 104.42 101.67
Gasolineb
(dollars per gallon)
3.63 3.51 3.45 3.38
Dieselc
(dollars per gallon)
3.97 3.92 3.85 3.80
Heating Oild
(dollars per gallon)
3.79 3.78 3.79 3.65
Natural Gasd
(dollars per thousand cubic feet)
10.69 10.31 11.09 11.13
Electricityd
(cents per kilowatthour)
11.88 12.12 12.48 12.69
Coale
(dollars per million Btu)
2.38 2.35 2.36 2.36

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