Content about Petroleum

WASHINGTON — While natural gas working inventories reached an all-time weekly record in early November, weather forecasts predicting a winter much colder than last year’s mild season imply that large increases in natural gas use for heating are to come, according to this month’s Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA).

Overall natural gas consumption in late October and early November showed little response to Hurricane Sandy, which hit the Northeast on Oct. 29. Declines in natural gas-fired generation because of electric power outages may have been somewhat mitigated by power producers substituting natural gas for shut-down nuclear capacity resulting from the storm. Most effects appear to have been short-lived, and EIA didn’t substantially adjust its forecast as a result, the report indicates.

EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, will average $2.78 per MMBtu in 2012 and $3.68 per MMBtu in 2013.

U.S. monthly average regular gasoline retail prices fell from $3.85 per gallon in September to $3.45 per gallon in November, as crude oil prices fell and the gasoline market transitioned from summer‐grade to lower-cost winter‐grade gasoline specifications.

Projected national average regular gasoline retail prices average $3.63 per gallon in 2012 and $3.43 per gallon in 2013, compared with $3.53 per gallon in 2011. Forecast diesel fuel retail prices average $4.02 per gallon during the fourth quarter of 2012 before falling to an average of $3.84 per gallon in 2013.

WASHINGTON — With crude oil prices going higher, the U.S. Energy Information Administration (EIA) has increased the average regular gasoline retail price forecast for the third quarter to $3.49 per gallon, 10 cents higher than last month’s Short-Term Energy Outlook.

EIA expects regular gasoline retail prices to average $3.53 per gallon in 2012 and $3.33 per gallon in 2013.

The Brent crude oil spot price will average about $103 per barrel during the second half of 2012, about $3.50 per barrel higher than in last month’s Outlook, and is forecast to fall to an average of $100 per barrel in 2013. The projected West Texas Intermediate (WTI) crude spot oil price discount to Brent crude oil narrows from about $14 in third-quarter 2012 to $9 by late 2013, assuming certain gross domestic product (GDP) growth.

U.S. total crude oil production is expected to average 6.3 million barrels per day (bbl/d) in 2012, an increase of 0.6 million bbl/d from last year, and the highest level of production since 1997. Production increases to 6.7 million bbl/d in 2013, EIA forecasts.

Drought conditions affecting corn harvests and prices throughout the Midwest pushed ethanol production lower, and EIA has reduced its 2012 forecast to 870,000 bbl/d, or 13.3 billion gallons. But the agency expects production to recover in the second half of 2013.

Natural gas working inventories ended July at an estimated 3.2 trillion cubic feet (Tcf), about 17% above the same time last year. EIA expects the Henry Hub natural gas spot price, which averaged $4 per million British thermal units (MMBtu) in 2011, to average $2.67 per MMBtu in 2012 and $3.34 per MMBtu in 2013.

WASHINGTON — Mild weather over the past winter contributed to natural gas working inventories that continue to set new record seasonal highs, with April ending at an estimated 2.61 trillion cubic feet (Tcf), about 46% more than the same time last year.

The U.S. Energy Information Administration’s (EIA) average 2012 Henry Hub natural gas spot price forecast is $2.45 per million British thermal units (MMBtu), a decline of $1.55 per MMBtu from the 2011 average spot price. EIA expects that Henry Hub spot prices will average $3.17 per MMBtu in 2013.

EIA expects electricity generation from coal to decline by about 15% in 2012 as generation from natural gas increases by about 24%. EIA forecasts that electricity generation from coal will increase by about 4% in 2013, as projected coal prices fall slightly while natural gas prices increase, allowing coal to regain some of its power generation share.

With global crude oil prices falling over the past month, EIA has lowered the average regular gasoline retail price forecast for the current April-through-September summer driving season to $3.79 per gallon, 16 cents per gallon below the level in the previous Short-Term Energy Outlook Report.

EIA expects regular gasoline retail prices to average $3.71 per gallon in 2012 and $3.67 per gallon in 2013, compared with $3.53 per gallon in 2011.

EIA’s current forecast of the average U.S. refiner acquisition cost of crude oil in 2012 is $110 per barrel, which is $2.50 per barrel lower than in last month’s Outlook, but still about $8 per barrel higher than last year’s average price. EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $104 per barrel in 2012, about $2 per barrel lower than the forecast in last month’s Outlook, but $9 per barrel higher than the 2011 average price. EIA expects crude oil prices to remain relatively flat in 2013.

WASHINGTON — The Henry Hub spot price averaged $4.31 per MMBtu in May, six cents higher than the April average and 11 cents higher than forecast in the agency’s previous report. This increase is reported amid growing consumption, even though inventories remain robust and the production forecast was “revised upward significantly.”

U.S. Energy Information Administration (EIA) expects total natural gas consumption will grow by 1.4% to 67.1 billion cubic feet per day (Bcf/d) in 2011. Forecast industrial and electric power consumption are expected to rise 3.1% to 18.7 Bcf/d in 2011 and 0.4% to 20.3 Bcf/d, respectively, the report says.

Projected total consumption rises slightly in 2012 to 67.2 Bcf/d, according to the EIA. Growth continues in the industrial sector at 1.6%, as the natural-gas-weighted industrial production index rises 2.7%. Consumption also increases in the electric power sector (2.1%). Residential and commercial consumption, however, decline by 2.8% and 2.2%, respectively, stemming from the forecast decline in heating demand for natural gas, the report says.

Working natural gas in storage was 2,107 Bcf at the end of May, 237 Bcf below last year’s level at this time. Inventories, though lower than last year, are expected to remain robust due to higher production throughout the 2011 injection season, the agency says.

The 2011 production forecast has been revised upward significantly due in part to unexpectedly strong March production reported in EIA’s latest report. The agency now expects total U.S. marketed natural gas production to increase by 4.5%, up from the 2.3% predicted in last month’s report.

EIA expects that the Henry Hub price will average $4.25 per MMBtu in 2011, a decline of 13 cents from the 2010 average. The agency says that the slowing growth in production will contribute to a tightening domestic market next year with the Henry Hub price averaging $4.58 per MMBtu in 2012.

Meanwhile, route drivers can expect gas prices to remain high. It’s the same old story: crude oil supplies are expected to tighten amid growing demand in the emerging economies and slowing growth in non-OPEC supply. The EIA reports that crude oil spot prices averaged $103 per barrel in March, $110 per barrel in April, and $101 per barrel in May. The agency predicts per-barrel prices in 2011 to average $102, compared to 2010’s $79 per barrel.