EIA Believes WTI To Average $106 This Year

April 2012, Vol. 239 No. 4

Image: Dmitri Castique.

The Energy Information Administration expects the price of West Texas Intermediate (WTI) crude oil to average about $106 per barrel in 2012, $5 per barrel higher than in the previous Outlook and $11 per barrel higher than the average price last year. Supply disruptions in the Middle East and Africa contributed to a significant increase in world crude oil prices during February.

The EIA has increased the forecast 2012 average cost of crude oil to U.S. refiners from $105 per barrel in February’s Outlook to $115 per barrel. Constraints in transporting crude oil from the U.S. midcontinent region contribute to the expected continuing discount for WTI relative to other world crude oil prices. The EIA expects WTI prices to remain relatively flat in 2013, averaging about $106 per barrel, while the U.S. refiner average cost of crude oil averages $110 per barrel.

The EIA expects regular grade motor gasoline retail prices to average $3.79 per gallon in 2012 and $3.72 per gallon in 2013, compared with $3.53 per gallon in 2011. During the April through September summer driving season this year, prices are forecast to average about $3.92 per gallon with a peak monthly average price of $3.96 per gallon in May. 

The EIA said warmer weather has resulted in natural gas working inventories that continue to set record seasonal highs with February ending at an estimated 2.44 Tcf, 41% above the same time last year. The average 2012 Henry Hub natural gas spot price forecast is $3.17 per MMBtu, a decline of $0.83 per MMBtu from the 2011 average spot price. It said the Henry Hub spot prices will average $3.96 per MMBtu in 2013.

The EIA expects electricity generation from coal to decline by nearly 5% in 2012 as generation from natural gas increases by about 9%. It forecasts that electricity generation from coal will increase by 3.8 percent in 2013, as projected coal prices to the power sector fall slightly while natural gas prices increase, and coal regains some of its power sector generation share.