The U.S. Energy Information Administration released its short-term energy outlook Tuesday. The report forecasts oil and natural gas production for the next two years.
North Sea Brent crude oil prices averaged $32 per barrel, a $1 increase from January prices. Brent crude prices are predicted to average $34 in 2016 and $40 in 2017. The forecast reflects higher –than-expected oil production in a low-price environment.
West Texas Intermediate crude oil prices are expected to average the same as Brent, however, there is uncertainty in the price outlook.
Crude production in the U.S. averaged about 9.4 million barrels per day in 2015. Production is predicted to drop slightly in each of the next two years with 8.7 million b/d in 2016 and 8.2 million b/d in 2017.
In February, the EIA estimates crude production at 9.1 million b/d. That’s 80,000 b/d less than January levels.
Natural gas inventories grew enormously over the past year. Working inventories reached 2,536 billion cubic feet on Feb. 26, 46 percent higher than during the same week last year. At the end of the winter heating season on March 31, the EIA forecasts that inventories will sit at 2,288 Bcf.
Henry Hub spot prices are expected to average $2.25/million British thermal units in 2016 and $3.02/MMBtu in 2017.
Natural gas is expected to be the largest share electricity generation in 2016 at 33 percent. Coal comes in second with 32 percent. If so, it will be the first time that natural gas provides more electricity generation than coal on an annual average basis.
In 2017, natural gas and goal are both forecast to produce 32 percent of the nation’s electricity generation. Hydropower’s share of electricity generation is forecast to grow to 7 percent, a 1 percent increase from 2015. The forecast share for other renewable energy sources increases from 8 percent in 2016 to 9 percent in 2017.