Wednesday, June 10, 2015

EIA Short-Term Energy Outlook

NYMEX WTI $61.55 up $1.41. As noted in June 2's "Oil: One Possible WTI Scenario":
The recent daily top ticks were:

May 6   $63.62
May 13 $62.75
May 18 $61.71
Today's high (thus far) was $61.75 thus breaking the series of lower highs by 4 cents but still considerably below the $65 level that folks have been mentioning as the point at which drilling becomes generally profitable.
From the Energy Information Administration, June 9, 2015:

  • North Sea Brent crude oil prices averaged $64/barrel (b) in May, a $5/b increase from April and the highest monthly average of 2015. Despite estimated global inventories increasing by more than 2 million barrels per day (b/d) for the third consecutive month, several factors contributed to higher prices in May, including continued signals of higher global oil demand growth, expectations for declining U.S. tight oil production in the coming months, and the growing risk of unplanned supply outages in the Middle East and North Africa.
  • EIA forecasts Brent crude oil prices will average $61/b in 2015 and $67/b in 2016. The 2016 price forecast is $3/b lower than in last month's STEO. West Texas Intermediate (WTI) prices in both 2015 and 2016 are expected to average $5/b less than the Brent price. The current values of futures and options contracts for December 2015 delivery suggest (Market Prices and Uncertainty Report) the market expects (at the 95% confidence interval) WTI prices in that month to range from $40/b to $92/b.
  • U.S. regular gasoline monthly average retail prices reached a 2015 high of $2.72/gallon (gal) in May, an increase of 25¢/gal from April. The higher prices reflect rising crude oil prices and isolated outages at West Coast and Midwest refineries. EIA expects monthly average gasoline prices to decline from their May level through the rest of the year, averaging $2.43/gal during the second half of 2015. EIA forecasts U.S. regular gasoline retail prices to average $2.44/gal in 2015, 1¢/gal higher than in last month's STEO, and $2.55/gal in 2016, 8¢/gal lower than in last month's STEO.
  • Total U.S. crude oil production averaged an estimated 9.6 million b/d in May, but it is expected to generally decline from June 2015 through early 2016 before growth resumes. Projected U.S. crude oil production averages 9.4 million b/d in 2015 and 9.3 million b/d in 2016. The forecast is 0.2 million b/d and 0.1 million b/d higher for 2015 and 2016, respectively, than in last month's STEO, primarily because of revisions to actual production data from the first quarter of 2015.
  • In every week since the April start of the natural gas storage injection season, weekly inventory builds have surpassed the previous five-year (2010-14) average. The 132 billion cubic feet (Bcf) increase in working gas inventories for the week ending May 29 was the largest injection in more than a decade. EIA forecasts inventories will total 3,912 Bcf at the end of October 2015, which would be 115 Bcf above the previous five-year average.