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January 23, 2019

EIA Forecasts U.S. Regular Gasoline Prices to Fall to $2.11/gal in 4th Quarter

The monthly average prices for U.S. regular gasoline is expected to decline to $2.11/gallon during the fourth quarter of 2015, according to the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook.

Monthly average retail prices averaged $2.79/gallon in July, a decrease of 1 cent/gal from June and 82 cents lower than in July 2014, according to EIA’s STEO released on Aug. 11. EIA forecasts U.S. regular gasoline retail prices to average $2.41/gal for all of 2015.

EIA forecasts the North Brent crude oil prices to average $54/barrel in 2015, $6/b lower than its last month’s forecast, and the West Texas Intermediate (WTI) crude oil prices at $49/b in both 2015 and 2016.

The current values of futures and options contracts for November 2015 delivery suggest that the market expects WTI prices to range from $34/b to $64/b (at the 95% confidence interval) in November 2015.

Brent crude oil prices averaged $57/barrel (b) in July, a $5/b decrease from June. Brent crude oil spot prices fell further in early August, settling at $48/b on August 7.

The recent price declines in the Brent crude reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global inventories, the STEO said.

On the nuclear deal with Iran, the STEO says if the agreement is implemented and sanctions relief occurs, it will put additional Iranian oil supplies on a global market that has already seen oil inventories rise significantly over the past year. This forecast assumes sanctions relief occurs in 2016, contributing to an annual average increase in Iranian crude oil production of 0.3 million b/d from 2015 to 2016, with most of the increase coming in the second half of 2016.

EIA estimates total U.S. crude oil production declined by 100,000 barrels per day (b/d) in July compared with June. Production is expected to continue decreasing through mid-2016 before growth resumes late in 2016.

Projected U.S. crude oil production averages 9.4 million b/d in 2015 and 9.0 million b/d in 2016, 0.1 million b/d and 0.4 million b/d lower, respectively, than in July’s STEO.

Natural gas working inventories were 2,912 billion cubic feet (Bcf) on July 31, which was 23% higher than a year earlier and 2% higher than the previous five-year average (2010-14). EIA projects inventories will close the injection season at the end of October at 3,867 Bcf, which would be the second-highest end-of-October level on record.

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