Gasoline Prices Predicted to Rise Slightly

Unplanned disruptions among OPEC and supply problems in Libya drove crude oil prices upward.

September 11, 2013

WASHINGTON, D.C. – Monthly average crude oil prices increased for the fourth consecutive month in August 2013, as supply disruptions in Libya increased and concerns over the conflict in Syria intensified. The U.S. Energy Information Administration’s (EIA) forecast for Brent crude oil spot price, which averaged $108 per barrel during the first half of 2013, averages $109 per barrel over the second half of 2013 and $102 per barrel in 2014, $5 per barrel and $2 per barrel higher than forecast in last month’s STEO, respectively.

Projected West Texas Intermediate (WTI) crude oil prices average $101 per barrel in the fourth quarter of 2013 and $96 per barrel for 2014. Energy price forecasts are highly uncertain and could differ significantly from the projected levels. The current values of futures and options contracts suggest the lower and upper limits of the 95% confidence interval for the market’s expectations of monthly average WTI prices in December 2013 at $86 per barrel and $131 per barrel, respectively.

In August, unplanned disruptions among the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers reached an estimated 2.7 million barrels per day (bbl/d), the highest level since at least January 2011. Of this volume, 0.6 million bbl/d was attributable to non-OPEC producers, while OPEC producers accounted for the remaining 2.1 million bbl/d of outages. OPEC disruptions reached the highest level since at least January 2009, when EIA began tracking this information.

EIA’s forecast for the regular gasoline retail price averages $3.44 per gallon in the fourth quarter of 2013, 11 cents per gallon higher than in last month’s STEO. The annual average regular gasoline retail, which was $3.63 per gallon in 2012, is expected to be $3.55 per gallon in 2013 and $3.43 per gallon in 2014. As in the case of crude oil, the current value of futures and options contracts suggests a wide uncertainty in market expectations.

U.S. crude oil production increased to an average of 7.6 million bbl/d in August, the highest monthly level of production since 1989. EIA forecasts U.S. total crude oil production will average 7.5 million bbl/d in 2013 and 8.4 million bbl/d in 2014, about 0.1 million bbl/d and 0.2 million bbl/d higher, respectively, than forecast in last month’s STEO.

Advertisement
Advertisement
Advertisement