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The United States Energy Information Administration upped its forecasts of average crude oil prices by $1 a barrel and $3 for 2016 and 2017, respectively, on Tuesday, in its monthly Short-Term Energy Outlook report.
The new predictions say the average price in 2016 would stand at $43 a barrel and $52 a barrel in 2017. West Texas Intermediate price would be slight lower than Brent oil prices in 2016, but the two would be equal by 2017, the report said.
Nasdaq reported Brent crude prices at $51.32 on Tuesday.
Despite the positive predictions, the report expressed concerns regarding the oil market’s high uncertainty and volatility.
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“For example, EIA’s forecast for the average WTI price in September 2016 of $46/b should be considered in the context of Nymex contract values for September 2016 delivery,” the document read. "These contracts traded during the five-day period ending June 2 (Market Prices and Uncertainty Report) suggest the market expects WTI prices could range from $36/b to $69/b (at the 95% confidence interval) in September 2016.”
Regular gasoline prices in the United States during the summer are expected to be six cents higher than the EIA anticipated last month, but at $2.27 a gallon, the figure would still be 36 cents lower than the average price last year.
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On average, the retail price of gasoline in all of 2016 will stand at $2.13 a gallon, while in 2017, it would equal $2.27 a gallon – just a few cents higher than predictions from last month.
Domestic crude oil production will decline in the coming years, the report stated, standing by forecasts from last month. From 9.4 million barrels per day in 2015, the rate will decrease to 8.6 million barrels per day in 2016 and 8.2 million in 2017.
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…