When the U.S. Energy Information Administration (EIA) released its updated Short-Term Energy Outlook on Wednesday, the agency forecast that falling prices for crude oil will cut the U.S. average price for a gallon of regular gas from $3.39 in 2014 to $2.94 in 2015. The average fell to $2.99 on November 3, its lowest level in four years.
Also on Wednesday, we noted that 25 states had average gasoline prices below $3 a gallon. The total has risen to 30 in the past couple of days and another eight are within a nickel of dropping below $3 a gallon.
U.S. crude production will top 9 million barrels a day in December, and the EIA expects U.S. production to average 9.4 million barrels a day in 2015, the highest average annual U.S. output since 1972.
There are, of course, any number of things that could derail these projections. Because U.S. gasoline prices are more closely tied to the price of Brent than to the price of West Texas Intermediate (WTI), if something should cause the price of Brent to spike, gasoline prices will rise. That “something” could be a significant production cut by Saudi Arabia and other OPEC suppliers. Or it could be a steep rise in demand from China, which is trying to fill its strategic reserves at the lower prices, or political unrest in any number of countries.
Barring any sort of unexpected event, though, prices for both Brent and WTI are headed down. WTI was trading flat Friday morning at $74.21. WTI’s 52-week low closing price is $73.25. Brent was trading up 1% on Friday morning at around $78.30. The 52-week low is $76.76.
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