Global Crude Oil Prices
Brent crude oil spot prices in March averaged $107/bbl. This was the ninth consecutive month Brent crude oil spot prices averaged between $107/bbl and $112/bbl. The Brent crude oil price is projected to average $105/bbl and $101/bbl in 2014 and 2015, respectively.
The WTI crude oil spot price, which fell to an average of $95/bbl in January 2014, increased to an average of $101/bbl in February and March as a result of strong Midwestern refinery runs and the startup of the Marketlink pipeline moving crude from Cushing to the Gulf Coast. EIA expects that WTI crude oil prices will average $96/bbl in 2014, $1/bbl higher than in last month's STEO, and $90/bbl during 2015. The discount of WTI crude oil to Brent crude oil, which averaged more than $13/bbl from November 2013 through January 2014, fell to an average of nearly $7/bbl in March 2014. EIA expects the discount of WTI crude oil to Brent crude oil to grow in the coming months to an average $9/bbl in 2014 and $11/bbl in 2015, reflecting the economics of transporting and processing the growing production of light sweet crude oil in U.S. and Canadian refineries.
Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the forecast levels (Market Prices and Uncertainty Report). WTI futures contracts for July 2014 delivery, traded during the five-day period ending April 3, 2014, averaged $99/bbl. Implied volatility averaged 17%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in June 2014 at $85/bbl and $115/bbl, respectively. Last year at this time, WTI for July 2013 delivery averaged $96/bbl and implied volatility averaged 18%. The corresponding lower and upper limits of the 95% confidence interval were $82/bbl and $113/bbl.
Source: EIA – Short Term Energy Outlook