March 7, 2017 - U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.7 million b/d in 2018.

Benchmark North Sea Brent crude oil spot prices averaged $55 per barrel (b) in February, largely unchanged from the average in January.

EIA forecasts Brent crude oil prices to average $55/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are expected to average about $1/b less than Brent prices in the forecast. NYMEX contract values for May 2017 delivery traded during the five-day period ending March 2 suggest that a range of $46/b to $63/b encompasses the market expectation for WTI prices in May 2017 at the 95% confidence level.

Implied global petroleum and liquid fuels inventories increased by an estimated 0.5 million b/d in 2016. EIA expects a relatively balanced oil market in the next two years, with inventory builds averaging 0.1 million b/d in 2017 and 0.2 million b/d in 2018.

U.S. monthly average regular gasoline retail prices are expected to increase from $2.30/gallon (gal) in February 2017 to $2.51/gal in July before falling to $2.24/gal by December. U.S. regular gasoline retail prices are forecast to average $2.40/gal in 2017 and $2.44/gal in 2018.   

Natural Gas

U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.4 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, the first annual decline since 2005. Natural gas production in 2018 is forecast to rise by an average of 4.1 Bcf/d from the 2017 level.

In February, the average Henry Hub natural gas spot price fell by 45 cents per million British thermal units (MMBtu) from the January levels to $2.85/MMBtu. Unseasonably warm temperatures in the Lower 48 states contributed to lower prices.

New natural gas export capabilities and growing domestic natural gas consumption contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.03/MMBtu in 2017 to $3.45/MMBtu in 2018. NYMEX contract values for May 2017 delivery traded during the five-day period ending March 2 suggest that a range of $2.15/MMBtu to $3.82/MMBtu encompasses the market expectation for Henry Hub natural gas prices in May 2017 at the 95% confidence level.

Electricity, Coal, Renewables, and Emissions

Total U.S. electricity generation from utility-scale plants averaged 11,140 gigawatthours per day in 2016. Forecast generation declines by 0.7% in 2017 and then grows by 1.9% in 2018.

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 32% in 2017 as a result of higher expected natural gas prices. The natural gas share of generation is then expected to rise slightly to 33% in 2018. Coal’s forecast generation share rises from 30% in 2016 to average 31% in 2017 before falling back to 30% in 2018. Nonhydropower renewables are forecast to provide 9% of electricity generation in 2017 and 10% in 2018. The generation share of hydropower is forecast to be relatively unchanged from 2017 to 2018 at 7%, and the nuclear share of electricity generation declines slightly from almost 20% in 2017 to 19% in 2018.

EIA expects growth in coal-fired electricity generation to contribute to a 4% increase in coal production in 2017. Coal production is expected to be unchanged in 2018. EIA estimates the delivered coal price averaged $2.11/MMBtu in 2016, a 5% decline from the 2015 price. Coal prices are forecast to increase in 2017 and 2018 to $2.17/MMBtu and $2.21/MMBtu, respectively.

Wind energy capacity at the end of 2016 was 81 gigawatts (GW). EIA expects capacity additions in the forecast will bring total wind capacity to 95 GW by the end of 2018.

On a percentage basis, solar power is expected to be the fastest growing renewable energy source in the forecast period, with total utility-scale capacity increasing by 44% from the end of 2016 to 31 GW at the end of 2018. With that level of growth, solar is expected to account for 1.4% of total utility-scale electricity generation in 2018.

After declining by 1.9% in 2016, energy-related carbon dioxide (CO2) emissions are projected to decrease by 0.2% in 2017 and then increase by 1.6% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices. 

To view the full report, please visit: http://www.eia.gov/forecasts/steo/.