WASHINGTON – The U.S. Energy Information Administration (EIA) published its December Short-Term Energy Outlook (STEO) this week, forecasting that Brent crude oil prices will average $68 per barrel (bbl) in 2015, with prices up to $5/bbl below the annual average early in the year. The forecast for West Texas Intermediate (WTI) crude oil spot prices averages $63/bbl in 2015. The current values of futures and options contracts show high uncertainty regarding the price outlook.

North Sea Brent crude oil spot prices settled at $68/bbl on December 5, $48 below the 2014 peak reached in late June and the lowest daily price since May 2010. The declining prices reflect the combination of robust world crude oil supply growth and weak global demand, which have caused global oil inventories to rise. Recent events, including OPEC’s decision last month to maintain its current crude oil production target, have raised expectations that oil supply growth will continue contributing to rising inventories through the first half of 2015.

EIA expects that global oil inventories will build by almost 0.8 million bbl/d on average during the first half of 2015, up from 0.5 million bbl/d in the previous STEO. In the second half of 2015, production growth slows so inventories build at a lower rate. In 2014, inventories have built as global oil consumption growth has fallen well short of expectations, while supply growth has continued apace. Continuing inventory builds are expected to put further downward pressure on oil prices.

According to EIA, the U.S. average price for regular gasoline fell 10 cents from the previous week to $2.68 per gallon as of December 8, 2014 — 59 cents lower than the same time last year. This is the lowest U.S. average price since February 22, 2010, and the first time since October 4, 2010, that all five regions of the United States have average gasoline prices below $3 per gallon. U.S. average diesel fuel prices declined seven cents this week to $3.54 per gallon, down 34 cents from this time last year.