The Energy Information Administration of the Department of Energy predicts that the Brent crude oil spot price will reach about $103 per barrel during the second half of 2012. This is about $3.50 per barrel higher than the Outlook of the last month.
The price of Brent crude oil spot is expected to go down to an average of $100 per barrel in 2013. The expectations about the price discount of West Texas Intermediate (WTI) crude oil spot to Brent crude oil mark contraction from about $14 in the third quarter of 2012 to $9 by late 2013. These price expectations are based on the assumption that world consumption of oil influenced real gross domestic product (GDP). The latter went up by 3.0 percent in 2011, grows by 2.8 percent in 2012 and is expected to reach 2.9 percent in 2013.
Now that crude oil prices are higher, EIA has raised the average regular gasoline retail price expectations for the third quarter of 2012 to $3.49 per gallon from $3.39 per gallon in the Outlook of the last month. EIA predicts regular gasoline retail prices to be $3.53 per gallon in 2012 and $3.33 per gallon in 2013.
According to the forecast of EIA, U.S. total crude oil production will reach 6.3 million barrels per day in 2012, which is a growth of 0.6 million barrels per day from last year, and the highest level of production since 1997. U.S. domestic crude oil production is projected to go up to 6.7 million barrels per day in 2013.
Because of the drought which affected corn harvests and prices throughout the Midwest, ethanol production went down from 920 thousand barrels per day for the week ending June 8, 2012 to 809 thousand barrels per day for the week ending July 27, 2012.
EIA has slashed its forecast for the 2012 ethanol production from 900 thousand barrels per day (13.8 billion gallons) to 870 thousand barrels per day (13.3 billion gallons). EIA believes that ethanol production will recover in the second half of 2013 and will reach about 880 thousand barrels per day for the year.
Natural gas working inventories for July 2012 were estimated at 3.2 trillion cubic feet (Tcf), which is about 17 percent higher than the same time last year. According to EIA, the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, will reach $2.67 per MMBtu in 2012 and $3.34 per MMBtu in 2013.
