Energy Preview: US Crude Oil Imports Set To Fall Near Historical Low

Brent crude oil spot prices averaged $ 77 per barrel (b) in May, an increase of $ 5/b from the April level and the highest monthly average price since November 2014, according to the Short Term Energy Outlook from the US Energy Information Administration (EIA). EIA forecasts Brent spot prices will average $ 71/b in 2018 and $ 68/b in 2019. The 2019 forecast price is $ 2/b higher than in the May STEO. EIA expects West Texas Intermediate (WTI) crude oil prices will average almost $ 7/b lower than Brent prices in 2018 and $ 6/b lower than Brent prices in 2019.

For the 2018 April-September summer driving season, EIA forecasts US regular gasoline retail prices to average $ 2.87/gallon (gal), up from an average of $ 2.41/gal last summer. The higher forecast gasoline prices are primarily the result of higher forecast crude oil prices. Monthly average gasoline prices are expected to reach a summer peak in June of $ 2.92/gal and are forecast to decline gradually afterwards to $ 2.84/gal in September.

EIA estimates that US crude oil production averaged 10.7 million barrels per day (b/d) in May, up 80,000 b/d from the April level. EIA projects that US crude oil production will average 10.8 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.8 million b/d in 2019. EIA forecasts that total US crude oil and petroleum product net imports will fall from an annual average of 3.7 million b/d in 2017 to an average of 2.5 million b/d in 2018 and to 1.6 million b/d in 2019, which would be the lowest level of net oil imports since 1959.

EIA forecasts crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) will average 32.0 million b/d in 2018, a decrease of 0.4 million b/d from the 2017 level. OPEC crude oil production is expected to increase slightly to an average of 32.1 million b/d in 2019. The increase in production in 2019 is expected to occur despite falling production in Venezuela and Iran. EIA assumes these decreases will be offset by increasing production from Persian Gulf producers, primarily Saudi Arabia.