SHORT-TERM ENERGY OUTLOOK – Electricity

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Electricity

  • Total U.S. electricity generation from utility-scale power plants averaged 11,145 gigawatthours per day in 2016. Forecast U.S. generation declines by 1.2% in 2017, which mostly reflects expectations of milder temperatures in the third quarter of 2017 compared with the same period last year. Forecast generation grows by 1.8% in 2018 based largely on a forecast of colder temperatures during the first quarter 2018 compared with the same period in 2017 and on the expectation of a growing economy.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to about 31% in 2017 as a result of higher natural gas prices, increased generation from renewables and coal, and lower electricity demand. Coal’s forecast generation share rises from 30% last year to almost 32% in 2017. The projected generation shares for natural gas and coal are nearly identical in 2018, averaging between 31% and 32%.
  • Wind electricity generating capacity at the end of 2016 was 81 gigawatts (GW). EIA expects wind capacity additions in the forecast will bring total wind capacity to 88 GW by the end of 2017 and to 102 GW by the end of 2018.
  • Total utility-scale solar electricity generating capacity at the end of 2016 was 22 GW. EIA expects solar capacity additions in the forecast will bring total utility-scale solar capacity to 29 GW by the end of 2017 and to 32 GW by the end of 2018.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Coal

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Coal

  • Coal exports for the first five months of 2017 were 37 million short tons (MMst), which was 60% higher than coal exports over the same period last year. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 70 MMst, 17% above the 2016 level. The increase in coal exports contributes to an expected 58 MMst (8%) increase in coal production in 2017. In 2018, coal production is forecast to increase by 10 MMst (1%).

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

 

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Natural Gas

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Natural Gas

  • U.S. dry natural gas production is forecast to average 73.5 billion cubic feet per day (Bcf/d) in 2017, a 1.2 Bcf/d increase from the 2016 level. Natural gas production in 2018 is forecast to be 3.9 Bcf/d above the 2017 level.
  • In July, the average Henry Hub natural gas spot price was $2.98 per million British thermal units (MMBtu), about the same as in June. Higher natural gas exports and growing domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.06/MMBtu in 2017 to $3.29/MMBtu in 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $2.17/MMBtu to $4.48/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95% confidence level.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

 

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – U.S. Liquid Fuels

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

U.S. Liquid Fuels

  • U.S. regular gasoline retail prices averaged $2.30 per gallon (gal) in July, down 5 cents/gal from the average in June but 6 cents/gal higher than in July 2016. During the April-through-September summer driving season of 2017, U.S. regular gasoline retail prices are forecast to average $2.37/gal, 14 cents/gal higher than last summer. Annual average U.S. regular gasoline retail prices are forecast to be $2.33/gal in both 2017 and 2018.
  • U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016 and is forecast to average 9.3 million b/d in 2017. EIA forecasts crude oil production to average 9.9 million b/d in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Global Liquid Fuels

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Global Liquid Fuels

  • North Sea Brent crude oil spot prices averaged $48 per barrel (b) in July, $2/b higher than the June average and almost $4/b higher than in July 2016. EIA forecasts Brent spot prices to average $51/b in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $37/b to $68/b encompasses the market expectation for December WTI prices at the 95% confidence level.
  • EIA forecasts that global petroleum and liquid fuels inventories will be largely unchanged in 2017 and then increase by an average of 0.2 million b/d in 2018.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Prices

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Prices

  • North Sea Brent crude oil spot prices averaged $48 per barrel (b) in July, $2/b higher than the June average and almost $4/b higher than in July 2016. EIA forecasts Brent spot prices to average $51/b in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $37/b to $68/b encompasses the market expectation for December WTI prices at the 95% confidence level.
  • U.S. regular gasoline retail prices averaged $2.30 per gallon (gal) in July, down 5 cents/gal from the average in June but 6 cents/gal higher than in July 2016. During the April-through-September summer driving season of 2017, U.S. regular gasoline retail prices are forecast to average $2.37/gal, 14 cents/gal higher than last summer. Annual average U.S. regular gasoline retail prices are forecast to be $2.33/gal in both 2017 and 2018.
  • In July, the average Henry Hub natural gas spot price was $2.98 per million British thermal units (MMBtu), about the same as in June. Higher natural gas exports and growing domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.06/MMBtu in 2017 to $3.29/MMBtu in 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $2.17/MMBtu to $4.48/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95% confidence level.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Forecast Highlights

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of August 8, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Forecast Highlights

Global liquid fuels

  • North Sea Brent crude oil spot prices averaged $48 per barrel (b) in July, $2/b higher than the June average and almost $4/b higher than in July 2016. EIA forecasts Brent spot prices to average $51/b in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $37/b to $68/b encompasses the market expectation for December WTI prices at the 95% confidence level.
  • U.S. regular gasoline retail prices averaged $2.30 per gallon (gal) in July, down 5 cents/gal from the average in June but 6 cents/gal higher than in July 2016. During the April-through-September summer driving season of 2017, U.S. regular gasoline retail prices are forecast to average $2.37/gal, 14 cents/gal higher than last summer. Annual average U.S. regular gasoline retail prices are forecast to be $2.33/gal in both 2017 and 2018.
  • U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016 and is forecast to average 9.3 million b/d in 2017. EIA forecasts crude oil production to average 9.9 million b/d in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.
  • EIA forecasts that global petroleum and liquid fuels inventories will be largely unchanged in 2017 and then increase by an average of 0.2 million b/d in 2018.

Natural gas

  • U.S. dry natural gas production is forecast to average 73.5 billion cubic feet per day (Bcf/d) in 2017, a 1.2 Bcf/d increase from the 2016 level. Natural gas production in 2018 is forecast to be 3.9 Bcf/d above the 2017 level.
  • In July, the average Henry Hub natural gas spot price was $2.98 per million British thermal units (MMBtu), about the same as in June. Higher natural gas exports and growing domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.06/MMBtu in 2017 to $3.29/MMBtu in 2018. NYMEX contract values for December 2017 delivery that traded during the five-day period ending August 3 suggest that a range of $2.17/MMBtu to $4.48/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95% confidence level.

Electricity, coal, renewables, and emissions

  • Total U.S. electricity generation from utility-scale power plants averaged 11,145 gigawatthours per day in 2016. Forecast U.S. generation declines by 1.2% in 2017, which mostly reflects expectations of milder temperatures in the third quarter of 2017 compared with the same period last year. Forecast generation grows by 1.8% in 2018 based largely on a forecast of colder temperatures during the first quarter 2018 compared with the same period in 2017 and on the expectation of a growing economy.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to about 31% in 2017 as a result of higher natural gas prices, increased generation from renewables and coal, and lower electricity demand. Coal’s forecast generation share rises from 30% last year to almost 32% in 2017. The projected generation shares for natural gas and coal are nearly identical in 2018, averaging between 31% and 32%.
  • Coal exports for the first five months of 2017 were 37 million short tons (MMst), which was 60% higher than coal exports over the same period last year. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 70 MMst, 17% above the 2016 level. The increase in coal exports contributes to an expected 58 MMst (8%) increase in coal production in 2017. In 2018, coal production is forecast to increase by 10 MMst (1%).
  • Wind electricity generating capacity at the end of 2016 was 81 gigawatts (GW). EIA expects wind capacity additions in the forecast will bring total wind capacity to 88 GW by the end of 2017 and to 102 GW by the end of 2018.
  • Total utility-scale solar electricity generating capacity at the end of 2016 was 22 GW. EIA expects solar capacity additions in the forecast will bring total utility-scale solar capacity to 29 GW by the end of 2017 and to 32 GW by the end of 2018.
  • After declining 1.7% in 2016, energy-related carbon dioxide (CO2) emissions are projected to decrease 0.3% in 2017 and then to increase 2.0% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Natural Gas

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of May 9, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Natural Gas

Prices: The front-month natural gas futures contract for delivery at Henry Hub settled at $3.19 per million British thermal units (MMBtu) on May 4, an increase of 6 cents/MMBtu from April 3 (Figure 7). On April 27, the front-month futures contract moved from the May delivery contract to the June delivery contract, which was priced higher to account for increased summer demand for natural gas power generation. The natural gas spot price averaged $3.10/MMBtu in April, up 22 cents/MMBtu from March.

Figure 7: Cooling Degree Days

For the four weeks ending April 28, natural gas storage injections averaged 51 billion cubic feet (Bcf) per week, almost 10 Bcf per week more than the five-year average build for those weeks. With these storage injections, stocks increased well above the five-year average level for April, although they remain below last year’s level. With natural gas production returning to growth in recent months after declining in 2016, higher natural gas exports have helped moderate inventory builds this year. At the end of 2016, the 12-month moving average of consumption plus exports rose above production plus imports and remained higher through April (Figure 8). EIA expects this trend to continue through the rest of 2017, putting modest upward pressure on prices.

Figure 8: Brent and WTI Net Money Manager Positions

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Petroleum Products

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of May 9, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) declined 21 cents per gallon (gal) since April 3, settling at $1.48/gal on May 4 (Figure 4). The RBOB-Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) declined 10 cents/gal, settling at 33 cents/gal over the same period.

Despite weekly data showing April 2017 gasoline consumption plus exports set a new five-year high for the month, gasoline crack spreads averaged the lowest for the month of April since 2013. High gross refinery inputs contributed to a counter-seasonal rise in gasoline inventories, pressuring gasoline crack spreads to lower levels than in previous years. In this STEO, EIA estimates that U.S. total motor gasoline inventories rose 0.9 million barrels in April, compared with an average decline of 4.4 million barrels over the past five years.

Figure 4: Brent crude oil vs U.S. and Chinese equity indices

Gasoline spot market: The spot price premium of New York Harbor conventional gasoline over Gulf Coast conventional gasoline was 1 cent/gal on average in April (Figure 5), 7 cents/gal lower than the average premium over the past five years. High gasoline inventory levels in Petroleum Administration for Defense District (PADD) 1 (the East Coast), along with an increase in U.S. gasoline exports, may have contributed to the narrow premium of New York Harbor gasoline over Gulf Coast gasoline. On the East Coast, total gasoline inventories have remained high since the start of 2017, either reaching or setting new five-year highs. However, gasoline inventories in PADD 3 (the Gulf Coast) have generally stayed within the five-year range so far in 2017. Because most U.S. gasoline exports originate from PADD 3, initial data from the Weekly Petroleum Status Report showing U.S. finished gasoline exports rose by almost 0.1 million barrels per day (b/d) from March to April likely helped to limit gasoline stock builds on the U.S. Gulf Coast given the high level of refinery runs.

Figure 5: Crude oil implied volatility

Ultra-low sulfur diesel prices: The ultra-low sulfur diesel (ULSD) futures price decreased 15 cents/gal since April 3, settling at $1.41/gal on May 4. The ULSD-Brent crack spread declined by 4 cents/gal, settling at 26 cents/gal over the same period (Figure 6). Compared with last April, however, the ULSD crack spread was 9 cents/gal higher on average this year.

In contrast to U.S. gasoline stocks, U.S. distillate stocks declined from March to April, despite high refinery runs. U.S. distillate consumption set a new five-year high in April, as increasing activity in the U.S. industrial and transportation sectors may be supporting domestic distillate consumption. U.S. industrial production growth in the first quarter of 2017 accelerated from the third and fourth quarters of 2016. In addition, weekly rail traffic data from the Association of American Railroads indicate that rail traffic, which uses diesel fuel, has been higher so far in 2017 than during the same period in 2016. Also, oil and natural gas drilling rigs use diesel fuel in their operations and transport, and the increase in drilling activity in 2017 is likely also contributing to higher diesel consumption.

In addition to U.S. domestic consumption, U.S. distillate exports have remained stable at about 1.1 million b/d, on average, since January. However, during the week ending April 14, U.S. distillate exports set a weekly record of 1.4 million b/d. Declining distillate stocks and strong distillate consumption domestically and internationally have kept ULSD crack spreads in 2017 above 2016 levels.

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

SHORT-TERM ENERGY OUTLOOK – Crude Oil

Onyx Power and Gas Consulting continues a weekly series providing the Short Term Energy Outlook as of May 9, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives.

Crude Oil

Prices: During the first half of April, crude oil prices rose, returning to the mid-$50 per barrel (b) level where they had been from December through February. However, crude oil prices fell during the second half of April and on May 4 reached the lowest point since the end of November. Between April 3 and May 4, Brent crude oil front-month futures prices declined by $4.74/b to settle at $48.38/b, and West Texas Intermediate (WTI) front-month futures prices declined by $4.72/b to settle at $45.52/b (Figure 1). On average, however, Brent and WTI spot prices in April were $0.72/b and $1.73/b higher, respectively, than the March averages.

Figure 1: Historical crude oil front month futures prices

Reports from the Joint Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Ministerial Monitoring Committee suggested compliance with the crude oil production cut agreement remained high among its members in March. However, because global oil inventories remain high, oil ministers of several OPEC countries, including those of Saudi Arabia, Kuwait, and Iraq, have suggested their respective countries would support an extension to the crude oil production cut agreement for six months beyond the current end date in June. In addition to the voluntarily production cuts in several countries, Canada experienced an unplanned outage at an oil sands upgrader plant, which resulted in lower production of several Canadian crude oil streams.

Upside support for crude oil prices resulting from voluntary production cuts or unplanned outages over the past months has been countered by rising crude oil production in Libya and in the United States. Libya announced at the beginning of May that its crude oil production had increased to the highest level since late 2014. Further, U.S. crude oil production is estimated to have reached 9.1 million barrels per day (b/d) in April, the highest level since March 2016. The number of U.S. oil drilling rigs reached a two-year high at the beginning of May. Because of a lag between the deployment of drilling rigs and realized oil production, recent rig increases indicate that U.S. oil production will likely rise further in the coming months. Expectations of supply growth in 2017, particularly in the United States, as well as concerns that a potential extension of the agreement will not reduce global inventories as quickly as expected contributed to a sharp drop in crude oil prices in the first week in May.

EIA projects that the global crude oil market in 2017 and 2018 will have more supply growth compared with the April STEO, resulting in a lower forecast of crude oil prices in the coming months. The Brent crude oil spot price is forecast to average $53/b in 2017, down from $54/b in the April STEO, and $57/b in 2018, unchanged from the April STEO. WTI prices are expected to average $2/b lower than Brent prices in both years.

Growth in global liquid fuels supply is expected to limit upward price pressure over the next year. World liquid fuels supply is projected to grow by 1.4 million b/d in 2017 and by 1.9 million b/d in 2018. Compared with the April STEO forecast, those growth estimates are higher by about by 0.2 million b/d in 2017 and 0.1 million b/d in 2018. The upward revision to expected supply growth is based on higher expected crude oil production growth from the United States, Brazil, and Canada and more OPEC non-crude liquid production growth. Expected world liquid fuels consumption growth is largely unchanged from the previous STEO, with growth forecast at 1.6 million b/d in both 2017 and 2018.

EIA estimates U.S. commercial crude oil inventories declined by 7.4 million barrels during April, compared with an average increase of 7.4 million barrels over the past five years. The decline in U.S. crude oil inventories is likely because of the increase in gross inputs to refineries in April. In this STEO, EIA estimates that refinery inputs reached 17.2 million b/d in April, the highest on record for any month.

For most of April, the WTI 1st-13th month futures price spread narrowed relative to that of Brent, reflecting stronger near-term WTI prices as a result of the decline in U.S. crude oil inventories. The stronger near-term WTI prices movements relative to Brent suggests the global crude oil market likely did not experience crude oil inventory draws similar to those in the United States. However, with the decline of crude oil prices in early May, both WTI and Brent front-month prices weakened significantly compared with later-dated contracts. The WTI 1st-13th month futures price spread declined 29 cents/b to -$2.06/b from April 3 to May 4 (Figure 2). The Brent 1st-13th month futures price spread declined 67 cents/b to -$1.39/b over the same period.

Figure 2: Crude oil front month - 13th month futures price spread

Price spreads between Brent and medium-sour Middle Eastern crude oils continue to narrow, making light, sweet crude oil from the Atlantic Basin more price competitive for consumers in Asia. Reports from trade press indicate that crude oil exports from West Africa and Europe to Asia have increased over the past few months. In February, for the first time, the United States exported more crude oil to China than to any other country. Increased flows of light, sweet crude oil into Asia are lowering prices of local Asian crude oils of similar quality. In April, the price differential between the official selling price of a basket of mostly light, sweet crude oils set by Malaysia’s state-owned oil company, Petronas, and Dated Brent fell to $3.50/b from more than $4/b between October 2016 and March 2017 (Figure 3).

Figure 3: Brent and WTI Net Money Manager Positions

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment