Short Term Energy Outlook - Great Resource

SHORT TERM ENERGY OUTLOOK - SOURCE EIA http://www.eia.gov/forecasts/steo/index.cfm Global Crude Oil Prices EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $108 per barrel and $101 per barrel in 2013 and 2014, respectively, reflecting the increasing supply of liquid fuels from non-OPEC countries. After averaging $94 per barrel in 2012, the WTI crude oil price will average $94 per barrel in 2013 and $92 per barrel in 2014. By 2014, several pipeline projects from the mid-continent to the Gulf Coast refining centers are expected to come on line, reducing the cost of transporting crude oil to refiners, which is reflected in a drop in the price discount of WTI to Brent. Energy price forecasts are highly uncertain (Market Prices and Uncertainty Report). WTI futures contracts for July 2013 delivery traded during the five-day period ending April 4, 2013, averaged $96.35 per barrel, down about $8 per barrel from a year ago. Implied volatility averaged 18 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in July 2013 at $82 per barrel and $113 per barrel, respectively. Last year at this time, WTI for July 2012 delivery averaged $104 per barrel and implied volatility averaged 26 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $83 per barrel and $131 per barrel. U.S. Electricity Consumption EIA projects U.S. residential sales of electricity during the upcoming summer months (June, July, and August) will average 5 percent below sales during the summer of 2012. Forecast U.S. cooling degree days during June, July, and August 2013 are about 11 percent lower than last summer and about 5 percent lower than the prior 10-year average. For the entire year, U.S. residential electricity sales increase by 0.5 percent during 2013 and by 0.8 percent in 2014. U.S. retail electricity sales to the commercial sector increase by 1.0 percent in 2013 and by 0.8 percent in 2014. Industrial electricity sales increase by 1.4 percent and 1.2 percent in 2013 and 2014, respectively. U.S. Electricity Generation EIA expects total U.S. generation of electricity will grow by 1.0 percent in 2013 and by 0.9 percent in 2014. EIA expects generators to increase their use of existing coal capacity, leading to a 7.8-percent increase in U.S. coal generation during 2013. This increase, which results because of the increasing cost of natural gas relative to coal, raises the share of total generation fueled by coal from 37.4 percent 2012 to 39.9 percent in 2013, but still below coal's 42.3-percent fuel share in 2011. Conversely, the rising cost of natural gas pushes the share of generation fueled by natural gas down from 30.4 percent in 2012 to 28.0 percent this year, compared with a share of 24.7 percent in 2011. U.S. Natural Gas Consumption EIA expects that natural gas consumption will average 70.3 Bcf/d and 70.1 Bcf/d in 2013 and 2014, respectively. Forecasts for closer-to-average winter temperatures in 2013 and 2014 (compared with the record-warm temperatures in 2012) will lead to increases in natural gas used for residential and commercial space heating. The projected increase in natural gas prices contributes to a decline in natural gas used for electric power generation from 25.0 Bcf/d in 2012 to 22.9 Bcf/d in 2013 and 22.8 Bcf/d in 2014. U.S. Natural Gas Production and Imports Projected natural gas marketed production increases from 69.1 Bcf/d in 2012 to 69.3 Bcf/d in 2013, and 69.4 Bcf/d in 2014. Onshore production increases slightly over the forecast period, while federal Gulf of Mexico production declines. Natural gas pipeline gross imports, which have declined over the past five years, are projected to remain near their 2012 level over the forecast period. Liquefied natural gas (LNG) imports are expected to remain at minimal levels of less than 0.5 Bcf/d in both 2013 and 2014. U.S. Gasoline and Diesel Fuel Prices EIA expects that regular-grade gasoline retail prices, which averaged $3.69 per gallon last summer, will average $3.63 per gallon during the current summer (April through September) driving season. The projected monthly average regular retail gasoline price falls from $3.69 per gallon in May to $3.57 per gallon in September (see EIA Summer Fuels Outlook slideshow). Diesel fuel prices, which averaged $3.95 per gallon last summer, are projected to fall slightly to an average of $3.94 per gallon this summer. Daily and weekly national average prices can differ significantly from monthly and seasonal averages, and there are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 25 cents per gallon or more.