After reaching more than $92 a barrel in the past week, crude oil prices for February will average $90 and slip to a first-half year average of $88 predicted the U.S. Energy Information Administration.
The EIA came out with its February Short-Term Energy Outlook (STEO), in which the agency estimated commercial oil inventories fell to their lowest levels since mid-2014.
EIA increased its Brent crude oil price forecast for 2022 by nearly 11% in its February STEO update.
“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.”
The average price for regular-grade gasoline was $3.31 per gallon (gal) in January, nearly a dollar higher than one year ago, largely because of higher oil prices. EIA expects gasoline prices will average $3.24/gal in 2022, dropping below $3.00/gal in the last quarter.
Other key takeaways from the latest STEO include:
- Natural gas spot prices averaged $4.38 per million British thermal units (MMBtu) at the U.S. benchmark Henry Hub in January, a 16% increase from December prices. Cold weather in the Northeast and Midwest United States increased demand for natural gas for home heating. Global demand for natural gas also remains strong, and EIA expects 2022 U.S. liquefied natural gas (LNG) exports to increase 16% over 2021 levels. EIA forecasts that natural gas prices will rise to $4.70/MMBtu on average in February, then average around $3.80/MMBtu for the last three quarters of the year.
- EIA expects that renewable sources will provide 22% of U.S. electricity generation in 2022 and 24% in 2023, up from 20% in 2021. During the next two years, utilities plan to increase their wind generation capacity by 12 gigawatts (GW) and solar capacity by 46 GW.
The full Short-Term Energy Outlook is available on the EIA website.
