Oil prices to drop; summer fuel prices highest since 2014, EIA says

Crude oil prices are projected to decrease through the second half of 2022 and in 2023, but the pricing forecast comes with a lot of uncertainty amid Russia’s invasion of Ukraine, according to the U.S. Energy Information Administration (EIA).

The EIA released Tuesday (April 12) the April Short-Term Energy Outlook which shows the forecast depends on how the sanctions on Russia and corporate actions will impact its oil production or sale in global markets. Also, how other oil producers respond to existing oil prices and other macroeconomic developments might affect global oil demand. Crude oil prices are expected to fall as oil inventories increase between the second half of 2022 and the end of 2023.

International benchmark Brent crude oil prices are expected to average $108 per barrel in the second quarter and $102 per barrel in the second half of 2022. In 2023, the average price is projected to fall to $93 per barrel.

According to an EIA statement, its forecasts “remain highly uncertain, largely due to the variety of ways nations, energy producers, and the market could respond to Russia’s further invasion of Ukraine. Russia’s actions came at a time when global inventories of crude oil, natural gas and coal were below average, contributing to continued price volatility and high prices.”

This summer, U.S. prices for retail gasoline are projected to be an average of $3.84 per gallon, up from $3.06 per gallon last summer. Adjusted for inflation, the prices this summer would be the highest since the summer of 2014. Retail diesel prices are projected to be an average of $4.57 per gallon, also the highest inflation-adjusted price for the summer since 2014.

U.S. crude oil production is expected to rise by 0.8 million barrels per day to an average of 12 million barrels per day in 2022, from 2021. The production is expected to rise to 13 million barrels per day in 2023, surpassing the previous annual average record of 12.3 million barrels per day in 2019.

In 2022, the Henry Hub natural gas spot price is expected to be an average of $5.23 per million British thermal units. In April, the price is expected to rise to $5.95 per million British thermal units as a result of an increase in liquefied natural gas (LNG) exports. The price is expected to fall to an average of $4.01 per million British thermal units in 2023 as natural gas storage levels rise.

U.S. LNG exports are expected to be an average of 12.2 billion cubic feet per day in 2022, up 25% from 2021. The LNG prices and demand in Europe remain elevated amid high supply uncertainties as a result of Russia’s continued invasion of Ukraine.

Link here for the Short-Term Energy Outlook.