The U.S. Energy Information Administration (EIA) on Wednesday released its Short-Term Energy Outlook (STEO) for October. EIA is forecasting that the average price for a barrel of Brent crude oil will be $74 a barrel this year and $75 a barrel in 2019. West Texas Intermediate (WTI) crude is expected cost about $6 a barrel less in both years.
The EIA raised its estimated full-year average retail price for a gallon of regular gasoline by three cents to average $2.79. The agency also expects gasoline prices to average $2.85 per gallon for all of next year, an increase of three cents a gallon since last month’s projection.
Contributing to a decline of around 2% in WTI spot prices Wednesday is the EIA estimate that U.S. crude oil production averaged 11.1 million barrels a day in September and will average 10.7 million barrels a day for the full year, up from a daily average of 9.4 million barrels in 2017. September production was 200,000 barrels a day higher than August production. For 2019, the EIA now projects U.S. production will average 11.8 million barrels a day.
In its outlook for the coming winter, also published today, the EIA forecasts that natural gas prices will be 5% higher than last year, home heating oil will be 20% higher, and electricity will be 3% higher. Propane costs are forecast to be “similar” to 2017 prices. For EIA forecasting purposes, winter begins in October and ends in March.
Non-OPEC liquids production is forecast to rise by about 2.41 million barrels a day to 60.83 million barrels a day. Total world production is forecast at 99.87 million barrels a day, up from 97.71 million in 2017. Annual global consumption is forecast at 100.84 million barrels a day in 2019.
WTI crude oil prices are forecast to rise from an average of $50.79 a barrel in 2017 to $68.46 this year, climbing to $69.56 in 2019. Prices for Brent crude are forecast to average $74.43 a barrel this year and about $75.06 a barrel in 2019.
The STEO also notes that natural gas prices are expected to average $3.10 per million BTUs in 2018 and $3.23 in 2019, unchanged month over month.
WTI crude oil for November delivery opened down about 0.3% Wednesday, at $74.70 a barrel, and recently traded down about 2.2% at $73.33. The January 2019 futures contract traded at $73.13.