The U.S. Energy Information Administration (EIA) forecasts that the Brent crude oil price will average $90 per barrel in February and nearly $88 per barrel for the first half of this year.
In its February Short-Term Energy Outlook (STEO), EIA estimates that commercial oil inventories in the OECD fell to their lowest levels since mid-2014, which has contributed to current high prices.
EIA increased its Brent crude oil price forecast for 2022 by nearly 11 percent 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 percent 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 percent 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 percent of U.S. electricity generation in 2022 and 24 percent in 2023, up from 20 percent 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.