US raises forecast for oil prices, lowers outlook for natgas

07 June 2011 20:25  [Source: ICIS news]

WASHINGTON (ICIS)--The US Department of Energy (DOE) on Tuesday raised its forecast marginally for oil prices for this year and next, saying that it expects US refiners will pay an average of $104/bbl for 2011 and about $108/bbl in 2012.

A month ago, the department had forecast the US 2011 average crude price at $103/bbl and the 2012 average at $107/bbl.

In making those slight upward adjustments from its month-earlier forecast, the department cited prospects for higher oil consumption in China, Japan and the Middle East and ongoing uncertainties about unrest in some producing countries.

However, the department’s monthly short-term energy outlook (STEO) for June said that US natural gas prices were likely to remain stable for this year at around $4.25/MMBtu, an upward revision of one cent from last month’s outlook.

The department said that US natgas consumption was expected to rise by 1.4% this year and increase 3.1% in 2012, chiefly because of more industrial and electric power demand.

Despite those demand increases, the department’s Energy Information Administration (EIA) said that it expected the average Henry Hub spot price for natural gas to drop to $4.65/MMBtu for full-year 2012, a decline of seven cents from the administration’s May outlook.

That projected price decline for natgas was attributed to a forecast for a 4.5% increase in domestic US gas production for this year compared with the 2.3% advance that EIA had predicted last month.

The department also expected US retail gasoline prices to moderate somewhat from the $3.96/gal level seen in the first half of May.

That fuel price has declined in recent weeks, the EIA said, as refineries disrupted by Mississippi river flooding have begun to recover.

Although retail gasoline prices were expected to ease from the May $3.96/gal level, the department said that consumer fuel costs would remain elevated at an average of $3.75/gal through the US peak summer driving time, 1 April through 30 September.

That projected summertime average is almost $1 higher than the $2.76/gal price seen in the same period of 2010, the administration noted.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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