US average home heating expenditures during the upcoming winter heating season (Oct. 1 through Mar. 31) will be lower than last winter, according to the US Energy Information Administration’s Winter Fuels Outlook.
EIA forecasts that average household expenditures for homes heating primarily with natural gas will total $578 this winter, a $64 decline from last winter average. Homes primarily using propane and heating oil are expected to spend $1,437 and $1,392 this winter, $322 and $459 less, respectively.
The decline in expenditures is attributed to a combination of lower fuels prices and lower heating demand. Expected temperatures based on the latest forecasts from the National Oceanic and Atmospheric Administration (NOAA) are much warmer than last winter east of the Rocky Mountains, with the Northeast 13% warmer, the Midwest 11% warmer, and the South 8% warmer.
“Given the current indicators signaling a strong El Nino-Southern Oscillation, forecast temperatures across much of the US are projected to be warmer than the 10-year average. However, the past two winters provide a reminder that weather can be unpredictable, and the Winter Fuels Outlook includes forecasts for scenarios where heating degree days (HDD) in all regions may be 10% higher (colder) or 10% lower (warmer) than forecast,” EIA noted.
US petroleum, other liquids
The most recent data from the US Federal Highway Administration show Americans drove a record 1.82 trillion miles during the first 7 months of 2015, compared with the previous high of 1.77 trillion miles driven in the first 7 months of 2007, contributing to higher gasoline consumption in the US.
According to EIA’s Short-Term Energy Outlook issued this October, gasoline consumption in the US increased 3% during the first 7 months of 2015 compared with same period during 2014, reflecting strong growth in employment and lower gasoline prices.
Growing domestic consumption and strong gasoline consumption growth globally contributed to high refinery wholesale gasoline margins for most of 2015, which returned to more typical seasonal levels in September.
According to EIA’s most recent forecast, total US liquids fuels consumption will increase by 340,000 b/d (1.8%) in 2015, up from an increase of 140,000 b/d (0.8%) last year.
On the other side, US crude oil production is projected to increase from an average of 8.7 million b/d in 2014 to 9.2 million b/d in 2015 and then decrease to 8.9 million b/d in 2016. The crude oil production forecast continues to reflect an oil price outlook that will weigh on oil-directed rig counts and drilling and well completion activities throughout the forecast period.
US crude oil production started to decrease in the second quarter of 2015, beginning with Lower 48 onshore production in April. EIA expects US crude oil production declines generally to continue through August 2016, when total production is forecast to average 8.7 million b/d.
Global oil market
In this month’s STEO, EIA expects global oil consumption to rise by 1.3 million b/d in 2015 and by 1.4 million b/d in 2016, compared with a growth of 1.2 million b/d in 2014.
Crude oil production from members of the Organization of Petroleum Exporting Countries is forecast to rise 800,000 b/d in 2015 and to remain relatively flat in 2016. EIA estimates that OPEC crude oil production averaged 30.1 million b/d in 2014.
Iraq is expected to be the largest contributor to OPEC production growth in 2015. In 2016, additional OPEC crude oil supply is expected to come from Iran, which is forecast to increase production if international sanctions targeting its oil sector are suspended.
Non-OPEC petroleum and other liquids supply is forecast to increase by 1.3 million b/d in 2015, attributable to investments made when oil prices were higher, but to remain roughly flat in 2016. EIA estimates that production in non-OPEC countries grew by 2.3 million b/d in 2014, averaging 56.95 million b/d.
Global liquids production continues to exceed consumption, resulting in inventory builds throughout the forecast period. However, averaged global oil inventory builds are projected to fall from above 2 million b/d through the first half of 2015 to 1.5 million b/d during the second half of the year. In 2016, inventory builds are expected to slow to an average of 800,000 b/d.
Meanwhile, EIA noted that North Sea Brent crude oil prices averaged $48/bbl in September, a $1/bbl increase from August. However, volatility remained high during September.
EIA forecasts that Brent crude oil prices will average $54/bbl in 2015 and $59/bbl in 2016, unchanged from last month’s STEO. Forecast West Texas Intermediate crude oil prices average $4/bbl lower than the Brent price in 2015 and $5/bbl lower in 2016.