The EIA has said that North Sea Brent crude oil prices averaged US$64/bbl in May, a US$5/bbl increase from April and the highest monthly average of this year. Despite estimated global inventories increasing by over 2 million bpd for the third consecutive month, several factors contributed to higher prices in May, including continued signals of higher global oil demand growth, expectations for declining US tight oil production in the coming months, and the growing risk of unplanned supply outages in the Middle East and North Africa.
The EIA has also forecast that Brent crude oil prices will average US$61/bbl and US$67/bbl next year. The 2016 price forecast is US$3/bbl lower than in last month’s Short Term Energy Outlook (STEO). WTI prices for both 2015 and 2016 are expected to average US$5/bbl less than the Brent price. The current values of futures and options contracts for December 2015 delivery suggest the market expects WTI prices in that month to range from US$40 – 92/bbl.
US regular gasoline monthly average retail prices hit a 2015 high of US$2.72/gal. in May, an increase of 25 cents/gal. from April. The higher prices reflect rising crude oil prices and isolated outages at West Coast and Midwest refineries. The EIA has said that it expects monthly average gasoline prices to decline from their May level through the rest of the year, averaging US$2.43/gal. during the second half of this year. The EIA forecasts US regular gasoline retail prices to average US$2.44/gal. this year, 1 cents/gal. higher than in last month’s STEO, and US$2.55/gal. next year, 8 cents/gal. lower than last months’ STEO.
Total US crude oil production reportedly averaged 9.6 million bpd in May, but it is expected to generally decline from June 2015 through early next year before growth resumes. Projected US crude oil production averaged 9.4 million bpd in 2015 and 9.3 million bpd in 2016. The forecast is 0.2 million bpd and 0.1 million bpd higher for 2015 and 2016, respectively, than in last month’s STEO, primarily because of revisions to actual production data from the first quarter of the year.
For every week since the April start of the natural gas storage injection season, the EIA has reported that weekly inventory builds have surpassed the previous five year average. The 132 billion ft3 increase in working gas inventories for the week ending may 29 was the largest injection in over 10 years. The EIA forecasts inventories will total 3912 billion ft3 by the end of October this year, which would be 115 billion ft3 above the previous five year average.
Edited from press release by Claira Lloyd