The U.S. Energy Information Administration (EIA) on Tuesday released the latest update to its Short Term Energy Outlook (STEO). The EIA is forecasting an average U.S. pump price for 2017 of $2.40 per gallon of regular gasoline, up one cent from the previous forecast. The 2016 annual average was $2.15 per gallon.
Rising pump prices have followed on rising prices for crude oil in the wake of announced production cuts totaling about 1.8 million barrels a day from OPEC members and other oil-producing nations.
Crude oil production estimates call for an average of 9.2 million barrels a day in 2017, up from 9 million barrels in last month’s forecast. 2016 production averaged 8.9 million barrels a day. The EIA also raised its production forecast for 2018 from 9.53 million barrels a day to 9.73 million barrels.
The March report also changes to the EIA’s earlier estimates for crude oil and refined product pricing for 2017. Benchmark West Texas Intermediate (WTI) crude oil averaged $43.33 a barrel in 2016 and is forecast to rise to an average of $53.49 in 2017, up three cents compared with last month’s estimate. The average price for Brent crude is forecast to rise from $43.73 in 2016 to $54.62 this year, up eight cents from the February estimate. WTI crude is forecast to average $56.18 a barrel in 2018, while Brent is forecast at $57.18. Both estimates were unchanged month over month.
The EIA now forecasts a first quarter 2017 gasoline pump price of $2.33, up one cent compared with last month’s projection. By June the EIA reckons the price will rise to an average of $2.46 a gallon before dropping back to $2.31 in December.
Regarding the global rebalancing of the crude oil market the EIA said:
Implied global petroleum and liquid fuels inventories increased by an estimated 0.5 million b/d in 2016. EIA expects a relatively balanced oil market in the next two years, with inventory builds averaging 0.1 million b/d in 2017 and 0.2 million b/d in 2018.
WTI for April delivery traded up about 0.2% around $53.30 after touching a high of $53.80 earlier Tuesday morning. Brent crude for May delivery traded down less than 0.1% at $56.00 after posting an intra-day high of $56.01 earlier. From a high of near $57 a barrel in January, WTI has dropped more than 6% so far this year.