Winter Crude Oil and Distillate Price Outlook
Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2000.
Notes:
- While the low stock forecast adds some extra pressure to prices, crude oil cost is the major factor holding prices up this winter.
- The current EIA forecast shows residential prices averaging $1.14 this winter, assuming no volatility. The average retail price is about the same as last winter, but last winter included the price spike in January and February. In the Northeast, some consumers paid over $2.00 per gallon during the spike.
- Underlying crude oil prices are not expected to change much from this year to last. WTI averaged about $26.70 last winter, and is currently forecast to be about 60 cents per barrel less this winter.
- Although prices are expected to end the year about $27, they are projected to fall to about $25 in March 2001.
- As those of you who watch the markets know, there is tremendous uncertainty in the amount of crude oil supply that will be available this winter. Less supply means higher crude prices and thus higher heating oil prices.
- Weather also adds to the uncertainty. While a brief cold snap was a factor behind last year’s price spike, the winter as a whole was almost 7% warmer than normal in the Northeast. If we have a normal winter this year, consumers will be buying more heating oil than last year.