The Energy Information Administration of the Department of Energy projects that the Brent crude oil spot price will average about $103 per barrel during the second half of 2012, about $3.50 per barrel higher than in last month's Outlook.
The forecast Brent crude oil spot price falls to an average of $100 per barrel in 2013. The projected West Texas Intermediate (WTI) crude oil spot price discount to Brent crude oil narrows from about $14 in the third quarter of 2012 to $9 by late 2013. These price forecasts assume that world oil-consumption-weighted real gross domestic product (GDP), which increased by 3.0 percent in 2011, grows by 2.8 percent in 2012 and 2.9 percent in 2013.
With higher crude oil prices, EIA has increased the average regular gasoline retail price forecast for the third quarter of 2012 to $3.49 per gallon from $3.39 per gallon in last month's Outlook. EIA expects regular gasoline retail prices, which averaged $3.53 per gallon in 2011, to average $3.53 per gallon in 2012 and $3.33 per gallon in 2013.
EIA expects U.S. total crude oil production to average 6.3 million barrels per day in 2012, an increase of 0.6 million barrels per day from last year, and the highest level of production since 1997. Projected U.S. domestic crude oil production increases to 6.7 million barrels per day in 2013.
As a result of drought conditions affecting corn harvests and prices throughout the Midwest, ethanol production fell from 920 thousand barrels per day for the week ending June 8, 2012 to 809 thousand barrels per day for the week ending July 27, 2012.
EIA has reduced its 2012 ethanol production forecast from 900 thousand barrels per day (13.8 billion gallons) in last month's Outlook to 870 thousand barrels per day (13.3 billion gallons). EIA expects ethanol production to recover in the second half of 2013, averaging about 880 thousand barrels per day for the year.
Natural gas working inventories ended July 2012 at an estimated 3.2 trillion cubic feet (Tcf), about 17 percent above the same time last year. EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, to average $2.67 per MMBtu in 2012 and $3.34 per MMBtu in 2013.
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