US lowers price forecasts for oil and natgas for this year

08 May 2012 20:22  [Source: ICIS news]

WASHINGTON (ICIS)--The US Department of Energy (DOE) on Tuesday lowered its pricing forecast for this year on crude oil and natural gas, as production for both basic energy products is running ahead of demand.

The department’s data and analysis arm, the Energy Information Administration (EIA), said in its monthly short-term energy outlook (STEO) that it now expects the average cost of crude oil for this year will be $110/bbl.

That price forecast represents a $2.50/bbl decline from the administration’s energy outlook in April, but oil at $110/bbl for this year would still be about $8/bbl higher than the 2011 average price.

The EIA analysts said they expect crude prices to remain relatively flat in 2013.

In natural gas, the administration noted that “very mild weather over the past winter contributed to natural gas working inventories that continue to set new record seasonal highs”.

US natgas in storage at the end of last month was estimated by the administration to be 2,610bn cubic feet (bcf), fully 46% higher than in April 2011.

Because of that abundant supply, the administration said it expects the average 2012 Henry Hub natural gas spot price will be $2.45/MMbtu, a sharp decline of $1.55/MMBtu from the actual 2011 average spot price.

But that low gas price outlook is not going to last much longer, the administration said, as its analysts expect gas prices to rise in 2013 to a full-year average of $3.17/MMBtu.

($1 = €0.77)

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

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