November 12, 2014 –
Outlook For Oil / Gasoline
U.S. Energy Information Administration Administrator Adam Sieminsk offered his view that gas prices will likely remain below $3 nationwide in 2015 on a glut of crude in the market.
The news comes as WTI crude oil fell to $76.80 today and retail gasoline for sale in California dropped as low as $2.73 a gallon at one Sacramento station. The statewide average today is $3.20 says Gas Buddy. Sieminsk adds he expect the price to continue to decline.
Sieminsk issued the following comments on EIA’s November 2014 Short-Term Energy Outlook, which was released on Wednesday:
Crude Oil:
“Lower crude oil prices may curb drilling activity in some lower-producing U.S. basins, but total domestic oil production should continue to increase through next year as crude prices will be high enough to support most drilling in the major shale oil producing areas of Texas, North Dakota, New Mexico, and Colorado.”
“Rising U.S. crude oil production boosted estimated commercial oil inventories by 20.2 million barrels in October, the biggest increase in oil stocks for the month in 12 years and the fourth largest since 1920.”
“Global oil markets loosened considerably over the last two months, as world oil inventories increased by about 600,000 barrels per day in September and October, marking the third straight month of rising oil stocks. Recent global inventory builds are in contrast to this time last year, when stocks fell by 700,000 barrels per day.”
“Continued growth in global oil supply in the face of weak oil demand will push crude prices lower in the near-term. The average price for Brent crude oil is expected to be about $18 a barrel lower next year than previously forecast.”
Gasoline:
“U.S. gasoline prices are expected to sink further below the $3 a gallon threshold through the end of this year and average under $3 for 2015.”
“The decline in gasoline prices reflects the sharp drop in crude oil costs for refiners caused by rising crude oil production and weak fuel demand.”
Winter Fuels Outlook:
“Lower oil prices are not only driving down gasoline costs, but U.S. consumers should also see bigger savings in their heating oil and propane bills this winter, freeing up money in the family budget.”
“Households that use heating oil should see a savings of nearly $600 in their heating bills compared to last winter, while Midwest propane users will pay about $850 less.”
Natural Gas:
“The U.S. heating season began this month with ample natural gas inventories of almost 3.6 trillion cubic feet, after average gas injections into storage exceeded the five-year average for 29 straight weeks.”
“A record 2.7 trillion cubic feet of natural gas was put into storage by the start of the U.S. heating season this month.”
Electricity:
“Power generation capacity in the Northeast is undergoing a significant change as the Vermont Yankee nuclear power plant is scheduled to cease operations in December and nearly three gigawatts of coal-fired capacity has been retired in the region in the last year. Much of the lost nuclear and coal-fired electricity generation capacity in the Northeast will be replaced by generation from natural gas-fired power plants and by increased imports of hydroelectricity from Canada.”
Coal:
“Higher electricity demand and higher natural gas prices will increase coal consumption this year for U.S. electricity generation.”