EIA Releases April’s U.S. Short-Term Energy Forecast and 2018 Summer Fuels Outlook
Dr. Linda Capuano, Administrator of the U.S. Energy Information Administration, issued the following comments on EIA’s April 2018 Short-Term Energy Outlook and the 2018 Summer Fuels Outlook, which was released on Tuesday:
The full STEO can be downloaded at: http://www.eia.gov/forecasts/steo/
Global Liquid Fuels
- For the 2018 April–September summer driving season, EIA forecasts U.S. regular gasoline retail prices to average $2.74/gallon (gal), up from an average of $2.41/gal last summer (see Summer Fuels Outlook). The higher forecast gasoline prices are primarily the result of higher forecast crude oil prices. For all of 2018, EIA expects U.S. regular gasoline retail prices to average $2.64/gal and gasoline retail prices for all grades to average $2.76/gal, which would result in the average U.S. household spending about $190 (9%) more on motor fuel in 2018 compared with 2017.
- Brent crude oil spot prices averaged $66 per barrel (b) in March. EIA forecasts Brent spot prices will average about $63/b in both 2018 and 2019. EIA expects West Texas Intermediate (WTI) crude oil prices to average $4/b lower than Brent prices in both 2018 and 2019. NYMEX WTI futures and options contract values for July 2018 delivery that traded during the five-day period ending April 5, 2018, suggest a range of $52/b to $78/b encompasses the market expectation for July 2018 WTI prices at the 95% confidence level.
- EIA estimates that U.S. crude oil production averaged 10.4 million barrels per day (b/d) in March, up 260,000 b/d from the February level. Total U.S. crude oil production averaged 9.3 million b/d in 2017. EIA projects that U.S. crude oil production will average 10.7 million b/d in 2018, which would mark the highest annual average U.S. 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 again increase, averaging 11.4 million b/d.
- U.S. dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017. EIA forecasts dry natural gas production will average 81.1 Bcf/d in 2018, establishing a new record. EIA expects natural gas production will rise by 1.7 Bcf/d in 2019.
- Growing U.S. natural gas production is expected to support both growing domestic consumption and increasing natural gas exports in the forecast. EIA forecasts U.S. consumption of natural gas to increase by 4.2 Bcf/d (5.7%) in 2018 and by 0.7 Bcf/d (0.9%) in 2019, with electric power generation the leading contributor to this increase. EIA also expects net natural gas exports to increase from 0.4 Bcf/d in 2017 to an annual average of 2.2 Bcf/d in 2018 and 4.4 Bcf/d in 2019.
- EIA estimates that natural gas inventories ended March (typically considered the end of the winter heating season) at almost 1.4 trillion cubic feet (Tcf), which was 19% lower than the previous five-year average. Based on a forecast of rising production, EIA forecasts that natural gas inventories will increase by more than the five-year average rate of growth during the injection season (April–October) to reach almost 3.8 Tcf on October 31, which would be 2% lower than the previous five-year average.
- EIA expects Henry Hub natural gas spot prices to average $2.99/million British Thermal units (MMBtu) in 2018 and $3.07/MMBtu in 2019. The average NYMEX futures and options contract values for July 2018 delivery that traded during the five-day period ending April 5, 2018, suggest that a range of $2.30/MMBtu to $3.43/MMBtu encompasses the market expectation for July Henry Hub natural gas prices at the 95% confidence level.
Electricity, coal, renewables, and emissions
- For the summer cooling season (June–August), EIA forecasts that the average U.S. household will spend $426 on electricity bills, which would be an increase of more than 3% from last summer. EIA forecasts average household electricity use will be 1% higher this summer compared with last summer, based on a forecast of slightly warmer temperatures, and that retail electricity prices will be 2% higher than last summer.
- EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 32% in 2017 to 34% in 2018 and to remain at 34% in 2019. The forecast electricity generation share from coal averages 29% in both 2018 and 2019, down from 30% in 2017. The nuclear share of generation was 20% in 2017 and is forecast to average 20% in 2018 and 19% in 2019. Nonhydropower renewables provided slightly less than 10% of electricity generation in 2017 and are expected to provide 10% in 2018 and nearly 11% in 2019. The generation share of hydropower was about 7% in 2017 and is forecast to fall to less than 7% in both 2018 and 2019.
- EIA forecasts coal production to decline by 5% to 738 million short tons (MMst) in 2018. The production decrease is largely attributable to lower forecasts of coal use in the electric power sector (down 4% in 2018). Lower expected global demand for U.S. coal exports in 2018 and 2019 also contributes to the forecast of lower coal production. EIA expects production to then increase slightly to 748 MMst in 2019.
- In 2017 EIA estimates that wind generated an average of 697,000 megawatthours per day (MWh/d). EIA projects that will rise to 735,000 MWh/d in 2018 and to 779,000 MWh/d in 2019. If factors such as precipitation and snowpack remain as forecast, conventional hydropower is projected to generate 732,000 MWh/d in 2019, making it the first year that wind generation would exceed hydropower generation in the United States.
- After declining by 0.7% in 2017, EIA forecasts that energy-related carbon dioxide (CO2) emissions will increase by 0.9% in 2018 and by another 1.0% in 2019. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.