Federal officials have raised their expectations for diesel and gasoline prices this year and are predicting even larger hikes for 2017, according to a new Energy Department report.
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In January 2016, Brent crude oil spot prices closed at a low of $26 per barrel (b) and a high of $36/b, and this $10/b trading range was higher than the range of any month in 2015.
“U.S. crude oil production in 2017 is expected to be more than 100,000 barrels per day higher than previously forecast in response to higher oil prices”, EIA Administrator Adam Sieminski said in comments released after the data, as carried by Reuters. The most significant increase came in the Rocky Mountain region, where prices rose 2.2 cents.
“Improving economic data, growing supply disruptions, and falling USA crude oil production and rig counts contributed to the price increase”, the EIA said in the report adding that the Brent average price in April amounted to $42 per barrel which is $3 higher than in March.
EIA also forecast U.S. gas consumption would edge up to 76.48 bcfd in 2016 versus the 76.24 bcfd it forecast in April.
Demand from other regions may offset the US demand shift, Sieminski said.
The increased volatility occurred when overall oil prices were low, and volatility was driven by high uncertainty related to supply, demand, and inventories.
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“Rising crude oil prices are likely to be passed on to consumers at the pump, but USA drivers are still expected to pay the lowest summer gasoline prices since 2004”, Sieminski said.
