Brent and West Texas Intermediate crude traded up on Tuesday, despite a new report by the Energy Information Administration (EIA) that lowered its outlook on average barrel prices in 2018.
Just like last month, the agency predicted a $53-Brent barrel in 2017, but lowered its forecast for 2018 by $1 to $56. WTI will go at a rate $2 lower than Brent in both years, the EIA said in its Short-Term Energy Outlook (STEO).
The report also included an evaluation of the Organization of Petroleum Exporting Countries' (OPEC) expected controls on production for 2017 and 2018, after the group agreed to extend output cuts through March 2018.
"EIA forecasts OPEC crude oil production will average 32.3 million barrels per day (b/d) in 2017 and 32.8 million b/d in 2018," it said.
The agency also slightly reduced its forecast for natural gas production in the report. Whereas the May report predicted a 2017 average of 74.1 billion cubic feet per day, this month's edition said production would be closer to 73.3 billion cubic feet per day over the same period.
"EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34 percent in 2016 to less than 32 percent in both 2017 and 2018 as a result of higher expected natural gas prices," the report read. "Coal's forecast generation share rises from 30% in 2016 to 31% in 2017 and 2018."
This STEO is the first since President Donald Trump announced the U.S.' withdrawal from the Paris climate change accord last week. A formal notice to the United Nations for the country's withdrawal can only be posted on or after November 2019 because the accord stipulates that nations that sign on to it stay for at least three years before considering a departure.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More