EIA's Short Term Energy Outlook -- December 12, 2017

Oil Markets:

• Average Brent crude oil spot prices climbed by $5 per barrel last month, rising from October’s average of $58 to $63 per barrel in November. Our forecast, however, expects that average to retreat in 2018 to an annual average of $57 per barrel. [Bad, bad news for Saudi Arabia; re-balancing ain't working.]
• U.S. crude oil production increased in November, up roughly 400,000 barrels per day from October’s production levels. EIA attributes a large share of that increase to production in the Gulf of Mexico, which has recovered from the effects of Hurricane Nate. An additional increase of 100,000 barrels per day in December is forecast to put production at 9.77 million barrels per day for the month.
• For 2017, EIA estimates U.S. crude oil production to average 9.2 million barrels per day. The forecast going into 2018 expects to see production increase to 10.0 million barrels per day, which would become the highest average annual production rate of crude oil in U.S. history. [The end of the Peak Oil Theory as we know it.]

Gasoline/Refined Products:

• EIA expects December’s U.S. regular gasoline retail price to average $2.59 per gallon, roughly 34 cents above the average in December 2016, with the increase mostly reflecting higher crude oil prices this year. [One can easily find regular unleaded gasoline for $2.09 in the DFW area.]
• EIA’s last short-term forecast of 2017 projects that U.S. regular retail gasoline prices will average $2.51 per gallon in 2018.

Natural Gas:

• EIA forecasts U.S. dry natural gas production to average 73.5 billion cubic feet per day in 2017, and EIA models suggest that dry natural gas production levels will approach 80 billion cubic feet per day in 2018. 
• Growing production in the Marcellus and Utica shale regions is a large driver of this increase.

Electricity:

• Natural gas and coal’s shares of utility-scale electricity generation are expected to remain relatively unchanged through 2018. Both natural gas and coal are forecast to hover near 32% and 31%, respectively, in 2018.

Coal:

• EIA forecasts that decreased exports and marginal growth in coal consumption will lower coal production to 771 million short tons in 2018, down about 20 million short tons from the expected 2017 production level of 791 million short tons.

Renewables:

• Renewables, not including hydroelectric generation, should gain two percentage points in their share of utility-scale generation from about 8% in 2016 to 10% in 2018. A significant part of that projected increase is tied to the forecasted growth in wind generating capacity during 2018. [All else being equal, expect utility rates to rise.]