Short-Term Energy Outlook
North Sea Brent crude oil spot prices increased from a monthly average of $108/barrel (bbl) in April to $110/bbl in May. This was the 11th consecutive month in which the average Brent crude oil spot price fell within a relatively narrow range of $107/bbl to $112/bbl. The discount of West Texas Intermediate (WTI) crude oil to Brent crude oil, which averaged more than $13/bbl from November through January, fell below $4/bbl in early April before increasing to an average of $7/bbl in May. EIA projects Brent crude oil prices to average $108/bbl in 2014 and $102/bbl in 2015 and the WTI discount to Brent to average $9/bbl and $11/bbl in 2014 and 2015, respectively.
During the April-through-September summer driving season this year, regular gasoline retail prices are forecast to average $3.62/gallon (gal), 4 cents higher than last year. The projected monthly national average regular gasoline retail price falls from the high this year of $3.67/gal in May to $3.54/gal in September. EIA expects regular gasoline retail prices to average $3.50/gal in 2014 and $3.38/gal in 2015, compared with $3.51/gal in 2013.
EIA estimates that U.S. total crude oil production averaged almost 8.4 million barrels/day (bbl/d) in May, the highest monthly average production since March 1988. U.S. total crude oil production, which averaged7.4 million bbl/d in 2013, is expected to average 8.4 million bbl/d in 2014 and 9.3 million bbl/d in 2015. The 2015 forecast represents the highest annual average level of oil production since 1972.
Natural gas working inventories on May 30 totaled 1.50 trillion cubic feet (Tcf), 0.74 Tcf (33%) below the level at the same time a year ago and 0.90 Tcf (37%) below the previous five-year average (2009-13). EIA expects that the Henry Hub natural gas spot price, which averaged $3.73/MMBtu in 2013, will average $4.74/MMBtu in 2014 and $4.49/MMBtu in 2015.
Based on the outlook from the National Oceanic and Atmospheric Administration (NOAA) for near- to below-normal tropical weather activity this year, EIA’s mean estimates of shut-in production in the federal Gulf of Mexico (GOM) during the current hurricane season (June through November) total 12 million bbl of crude oil and 30 billion cubic feet (Bcf) of natural gas (see 2014 Outlook for Gulf of Mexico Hurricane‐Related Production Outages). Actual shut-ins are likely to differ significantly from this estimate depending on the number, track, and strength of hurricanes as the season progresses.