Forecast Highlights

Global liquid fuels

• Implied global petroleum and liquid fuels inventories are estimated to have increased by 0.8 million barrels per day (b/d) in 2016. EIA expects the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million b/d in 2017 and builds averaging 0.2 million b/d in 2018. The revised forecast, which reduces average inventory builds from last month's outlook, resulted from changes to estimates of historical global liquid fuels consumption that created a higher base for consumption during recent years and the forecast period. See International Data Revisions and the STEO Forecast for more discussion about this change.

• U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S crude oil production is forecast to average 9.0 million b/d in 2017 and 9.5 million b/d in 2018.

• Benchmark North Sea Brent crude oil spot prices averaged $55/barrel (b) in January, a $1/b increase from December. This price was $24/b higher than the January 2016 average, and it was the highest monthly average for Brent spot prices since July 2015.

• EIA forecasts Brent crude oil prices to average $55/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average about $1/b less than Brent prices in 2017. The NYMEX contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a range from $45/b to $65/b encompasses the market expectation of WTI prices in April 2017 at the 95% confidence level.

• U.S. regular gasoline retail prices are expected to decrease from an average of $2.35/gallon (gal) in January 2017 to an average of $2.27/gal in February and then rise to $2.33/gal in March. U.S. regular gasoline retail prices are forecast to average $2.39/gal in 2017 and $2.44/gal in 2018.

Natural gas

• U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.3 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, which was the first decline since 2005. Natural gas production in 2018 is forecast to increase by an average of 4.1 Bcf/d from the 2017 level.

• In January, average Henry Hub natural gas spot prices fell by 29 cents per million British thermal units (MMBtu) from December levels to $3.30/MMBtu. Mild January temperatures, which were the warmest since 2006, contributed to lower prices.

• Increasing capacity for natural gas-fired electric generation, growing domestic natural gas consumption, and new export capabilities contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.43/MMBtu in 2017 to $3.70/MMBtu in 2018. NYMEX contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a price range from $2.42/MMBtu to $4.38/MMBtu encompasses the market expectation of Henry Hub natural gas prices in April 2017 at the 95% confidence level.

Electricity, coal, renewables, and emissions

• Total U.S. electricity generation from utility-scale plants averaged 11,150 gigawatthours per day in 2016. Forecast U.S. generation declines by 0.1% in 2017, then grows by 1.5% in 2018.

• EIA expects the share of U.S. total utility-scale electricity generation from natural gas will fall from 34% last year to an average of 32% in 2017 as a result of higher expected natural gas prices. The forecast natural gas share is forecast to rise slightly to 33% in 2018. Coal's generation share rises from 30% in 2016 to average 31% in both 2017 and 2018. Nonhydropower renewables are forecast to provide 9% of electricity generation in 2017 and 10% in 2018. The generation share of hydropower is forecast to be relatively unchanged from 2017 to 2018, and the nuclear share declines slightly in 2018.

• The U.S. residential electricity price averaged 12.3 cents per kilowatthour (kWh) in January 2017 and is expected to average 12.5 cents/kWh in the first quarter of 2017. EIA expects the annual average U.S. residential electricity price to increase by 3.0% in 2017 and by 2.4% in 2018.

• U.S. coal production is estimated to have declined by 158 million short tons (MMst) (18%) in 2016 to 739 MMst, which would be the lowest level since 1978. EIA expects growth in coal-fired electricity generation to contribute to a 3% increase in coal production in 2017. Coal production is expect to increase by 1% in 2018.

• Coal exports in November 2016 totaled 6.6 MMst, which was 35% higher than in October and 39% higher than coal exports in November 2015. Despite the monthly and year-over-year increases, EIA estimates that U.S. coal exports declined by 20% in 2016 to 59 MMst, the lowest level since 2009. Exports are expected to average 51 MMst in 2017 and 50 MMst in 2018.

• Wind energy capacity at the end of 2016 was 81 gigawatts (GW). EIA expects capacity additions in the next two years will bring total wind capacity to 94 GW by the end of 2018.

• After declining by 1.7% in 2016, energy-related carbon dioxide (CO2) emissions are projected to increase by 0.3% in 2017 and by 1.4% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.