EIA forecasts higher summer gasoline prices

According to the US Energy Information Administration’s most recent Short-Term Energy Outlook (STEO), regular gasoline retail prices are projected to average $3.61/gal during the April-September summer driving season this year, 3¢ higher than last year and 4¢ higher than projected in last month’s STEO.

However, the projected US annual average regular retail gasoline price, which fell from $3.63/gal in 2012 to an average of $3.51/gal in 2013, will continue to fall to $3.48/gal in 2014 and $3.39/gal in 2015.

In the recent monthly outlook, total US liquid fuels consumption is expected to average 18.92 million b/d in 2014, 20,000 b/d more than projected in April, and 18.99 million b/d in 2015, compared with 18.89 million b/d in 2013. Total consumption growth, however, slows from an estimated 400,000 b/d in 2013 to 40,000 b/d in 2014 and 70,000 b/d in 2015.

Increasing transportation demand for distillate fuel oil and industrial demand for hydrocarbon gas liquids (HGL) are the main drivers of liquid fuels consumption. Consumption of HGL registered the largest gain in 2013, increasing 150,000 b/d (6.4%), and is projected to rise 30,000 b/d in 2014 and 50,000 b/d in 2015, led by increasing ethane use as a feedstock in ethylene production units. Distillate fuel consumption increased 90,000 b/d (2.5%) last year, reflecting colder weather and US economic growth and will rise 70,000 b/d and 60,000 b/d in 2014 and 2015, respectively.

Motor gasoline consumption will increase 20,000 b/d in 2014 and remains largely flat in 2015 as the recent strong growth in highway travel slows and continued improvements in new-vehicle fuel economy boost overall fuel efficiency growth. In 2013, motor gasoline consumption increased 90,000 b/d (1.1%)—the largest increase since 2006.

In the report, EIA forecasts total US crude oil production to increase from an estimated 7.4 million b/d in 2013 to 8.5 million b/d in 2014 and 9.2 million b/d in 2015. As new wells in the Mars field began producing ahead of schedule in February, Gulf of Mexico crude oil production—which has fallen for 4 consecutive years, is forecast to increase 150,000 b/d in 2014 and by an additional 240,000 b/d in 2015.

Petroleum imports continue to decline due to strong growth in US production. The share of total US liquid fuels consumption met by net import is expected to decline to 23% in 2015, the lowest level since 1970.

New pipeline capacity from the Midwest into the Gulf Coast helped reduce inventories at the Cushing, Okla., storage hub to 25 million bbl by the end of April, the lowest level since October 2009. The discount of West Texas Intermediate to Brent crude oil, which averaged more than $13/bbl from November through January, fell below $4/bbl in early April. EIA projects Brent crude oil prices to average $106/bbl in 2014 and $102/bbl in 2015 and the WTI discount to Brent to average $10/bbl and $11/bbl in 2014 and 2015, respectively.

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