North Sea Brent crude oil price averaged $65/bbl in February, a decrease of $4/bbl from January. The US Energy Information Administration expects prices to decline gradually, averaging $60/bbl in the second half of this year, according to its most recent Short-Term Energy Outlook.
EIA expects annual average Brent crude oil prices to remain near $62/bbl in both 2018 and 2019, which is lower than prices in recent weeks but is higher than the average of $54/bbl in 2017. EIA expects West Texas Intermediate crude oil prices to average $4/bbl lower than Brent prices in both 2018 and 2019.
US crude oil production averaged 10.3 million b/d in February, up by 230,000 from the January level, which included some well freeze-offs in the Permian and Bakken.
EIA has reported that total US crude oil production averaged 9.3 million b/d in 2017, ending the year with production at 9.9 million b/d in December. EIA projects that US crude oil production will average 10.7 million b/d in 2018, which would mark the highest annual average US crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.3 million b/d.
EIA estimates that inventories of global petroleum and other liquid fuels declined by 600,000 b/d in 2017. In this forecast, global inventories grow by about 400,000 b/d in 2018 and by another 300,000 b/d in 2019.
Natural gas
In February, the US benchmark Henry Hub natural gas spot price averaged $2.66/MMbtu, down $1.03/MMbtu from January. Winter weather moderated in February after extremely cold temperatures in much of the country during the first half of January. US heating degree days were an estimated 17% lower than the 10-year average for February, which contributed to lower consumption and prices.
Following record high gas inventory withdrawals in early 2018, the short-term outlook estimates that inventories for March 2018 will total 1,481 bcf, which represents a nearly 28% drop from March 2017. In fact, March 2015 was the last time inventories came close to that level.
EIA expects US natural gas production to reach new records in 2018. The forecast suggests that production will near 82 bcfd in 2018 and, therefore, inventory levels will fully recover from this year’s low levels by next winter.
