EIA: Market concerns affect oil price predictability

Energy

by Jeff Della Rosa ([email protected]) February 8, 2022 1:59 pm 349 views 

An imbalance between oil production and consumption has kept prices from falling amid market concerns that have contributed to pricing unpredictability, according to the U.S. Energy Information Administration (EIA).

The EIA released Tuesday (Feb. 8) the February Short-Term Energy Outlook that shows international benchmark Brent crude oil will be an average of $88 per barrel in the first half of 2022 and $90 per barrel in February. The EIA increased its Brent crude oil forecast for 2022 by nearly 11% in its February outlook.

“Petroleum production has been slow to catch up with consumption, which has prevented oil prices from moderating,” said EIA Acting Administrator Steve Nalley. “Market concerns about oil production disruptions, supply chain vulnerabilities and uncertainties around how central banks may react to combat inflation all contribute to a highly unpredictable environment for oil and petroleum product prices.”

Gasoline prices are expected to be an average of $3.24 per gallon in 2022 and fall to less than $3 per gallon in the fourth quarter of the year. The average price for a regular gallon of gasoline rose by nearly $1 to $3.31 in January, from the same month in 2021. The increase can largely be attributed to higher oil prices.

Following are other highlights in the February outlook:

  • Natural gas prices are projected to be an average of $3.80 per million British thermal units in the last three quarters of 2022 after rising to $4.70 per million British thermal units in February. Natural gas spot prices were an average of $4.38 per million British thermal units at the U.S. benchmark Henry Hub in January, a 16% increase from December prices. Cold weather contributed to increased demand for natural gas for home heating. Global demand for U.S. natural gas is also strong, and U.S. liquefied natural gas exports are projected to rise 16% in 2022, from 2021.
  • Renewable resources are expected to provide 22% of U.S. electricity generation in 2022 and 24% in 2023, up from 20% in 2021. Over the next two years, utilities plan to increase wind generation capacity by 12 gigawatts and solar capacity by 46 gigawatts.

Link here for the February outlook.