Crude oil prices decreased slightly in October with most of the decline coming at the end of the month, according to the monthly update to the US Energy Information Administration’s Short-Term Energy Outlook.
The Brent and West Texas Intermediate (WTI) front month futures contracts decreased by $4 and $5 per barrel, respectively, since Oct. 1 and settled at $108.17 and $87.09 dollars per barrel on Nov. 1 (see chart).
These are the lowest levels for both crude oil benchmarks since the beginning of August 2012.
EIA projects that the WTI crude oil price will average $89 per barrel in the fourth quarter of 2012, and the Brent crude oil price will average about $110 per barrel over the same period.
The projected WTI discount to Brent crude oil, which averaged $22 per barrel in October 2012, falls to an average of $11 per barrel in the fourth quarter of 2013.
EIA forecasts WTI crude oil to average $88 per barrel in 2013, while the Brent crude oil forecast remains unchanged at $103 per barrel.
EIA expects US total crude oil production to average 6.3 million barrels per day (bbl/d) in 2012, an increase of 0.7 million bbl/d from 2011. It also projects US domestic crude oil production to increase to 6.8 million bbl/d in 2013, the highest level of production since 1993.
Meanwhile, US regular gasoline retail prices began October at $3.80 per gallon and fell to $3.49 per gallon on Nov.5. Projected US regular gasoline retail prices average $3.56 per gallon during the fourth quarter of 2012.
Hurricane Sandy, however, has meant higher wholesale gasoline prices on the East Coast, and the recovery schedule for storm-damaged refineries, pipelines and distribution terminals adds to uncertainty over the near-term price outlook.
EIA expects regular gasoline retail prices, which averaged $3.53 per gallon in 2011, to average $3.64 per gallon in 2012 and $3.44 per gallon in 2013.
Working natural gas inventories are at a record high level, the Outlook says. As of Oct. 26, working inventories totaled 3,908 billion cubic feet (Bcf), which is 56 Bcf greater than the previous record high of 3,852 Bcf on Nov.18, 2011.
EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, to average $2.77 per MMBtu in 2012 and $3.49 per MMBtu in 2013.