U.S. Energy Department Raises 2013 Oil Forecast
Short-Term Energy Outlook
Release Date: January 8, 2013 | Next Release Date: February 12, 2013
This edition of the Short-Term Energy Outlook is the first to include forecasts for 2014.
EIA expects that the Brent crude oil spot price, which averaged $112 per barrel in 2012, will fall to an average of $105 per barrel in 2013 and $99 per barrel in 2014. The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which averaged $18 per barrel in 2012, falls to an average of $16 per barrel in 2013 and $8 per barrel in 2014, as planned new pipeline capacity lowers the cost of moving Mid-continent crude oil to the Gulf Coast refining centers.
EIA expects that falling crude prices will help national average regular gasoline retail prices fall from an average $3.63 per gallon in 2012 to annual averages of $3.44 per gallon and $3.34 per gallon in 2013 and 2014, respectively. Diesel fuel retail prices averaged $3.97 per gallon during 2012 and are forecasted to fall to an average of $3.87 per gallon in 2013 and $3.78 per gallon in 2014.
EIA estimates U.S. total crude oil production averaged 6.4 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year. Projected domestic crude oil production continues to increase to 7.3 million bbl/d in 2013 and 7.9 million bbl/d in 2014, which would mark the highest annual average level of production since 1988.
Total U.S. liquid fuels consumption fell from an average 20.8 million bbl/d in 2005 to 18.6 million bbl/d in 2012. EIA expects total consumption to rise slowly over the next two years to an average 18.8 million bbl/d in 2014, driven by increases in distillate and liquefied petroleum gas consumption, with flat gasoline and jet fuel consumption.
Natural gas working inventories, which a record-high level in early November, ended 2012 at an estimated 3.5 trillion cubic feet (Tcf), slightly above the level at the same time the previous year. EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011 and $2.75 per million MMBtu in 2012, will average $3.74 per MMBtu in 2013 and $3.90 per MMBtu in 2014.
EIA expects the coal share of total electricity generation to rise from 37.6 percent in 2012 to 39.0 percent in 2013 and 39.6 percent in 2014, as natural gas prices rise relative to coal prices. Lower-than-projected natural gas prices along with the industry's response to future environmental regulations could cause the coal share of total generation to fall below this forecast.