The Energy Information Agency had to lower their oil price outlook responding to falling prices, yet their outlook on natural gas was fascinating. The EIA, "Energy Information Agency", said that despite the recent volatility, the EIA expects oil markets to continue to tighten through 2012 and projected WTI spot prices average $103 per barrel in 2011 and $107 per barrel in 2012, reductions of about $4 and $6 per barrel from last month report.
The EIA says that retail gasoline price will increase from $2.78 per gallon in 2010 to $3.63 per gallon 2011 and to $3.66 per gallon in 2012. They say that regular-grade motor gasoline retail price averages $3.81 per gallon during this summer's driving season, up from $2.76 per gallon last summer, but 5 cents per gallon lower than last month's report. They say that the average regular gasoline price during the summer peaks in June at $3.88 per gallon. Prices of futures and options contracts for wholesale gasoline over the 5 days ending May 5 suggest a 41-percent probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during July 2011.
As for natural gas, the EIA expects record storage! The EIA says that natural gas working inventories ended April 2011 at 1.8 trillion cubic feet (Tcf), about 11%, or 230 billion cubic feet (Bcf), below the 2010 end-of-April level. The EIA expects that working gas inventories will build strongly during the summer and approach record-high levels in the second half of 2011. The projected Henry Hub natural gas spot price averages $4.24 per million British thermal units (MMBtu) in 2011, $0.15 per MMBtu lower than the 2010 average. EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of $4.65 per MMBtu.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.