The latest short-term report from the US Energy Information Administration (EIA) anticipates that the Brent crude oil spot price, which averaged $112/bbl in 2012 and rose to $119/bbl in early February 2013, will average $108/bbl in 2013 and $101/bbl in 2014.
The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which increased to a monthly average of more than $20/bbl in February 2013, will average $16/bbl in 2013 and $9/bbl in 2014, as planned new pipeline capacity lowers the cost of moving mid-continent crude oil to Gulf Coast refining centers.
US crude oil production exceeded an average level of 7 million bpd in November and December 2012, the highest volume since December 1992. EIA estimates that US total crude oil production averaged 6.5 million bpd in 2012, an increase of 0.8 million bpd from the previous year. Projected domestic crude oil production is expected to average 7.3 million bpd in 2013 and 7.9 million bpd in 2014.
Total US liquid fuels consumption fell from 20.8 million bpd in 2005 to 18.6 million bpd in 2012. The EIA expects total consumption to rise slightly over the next two years, to an average of 18.7 million bpd in 2014, driven by increases in distillate fuel and liquefied petroleum gas consumption, with little change in gasoline and jet fuel consumption.
The weekly US average regular gasoline retail price fell in early March for the first time since mid-December. The March 11 average was $3.71/gal, down $0.07/gal from February 25.
The EIA expects that lower crude oil prices will result in monthly average regular gasoline prices staying near the February average of $3.67/gal over the next few months, with the annual average regular gasoline retail price declining from $3.63/gal in 2012 to $3.55/gal in 2013 and to $3.38/gal in 2014. However, energy price forecasts are highly uncertain, and current values of futures and options contracts suggest that prices could differ from this forecast.