The WTI crude oil spot price, which fell to $95/bbl in January 2014, increased to an average of $101/bbl in February as a result of strong Midwestern refinery runs after cold-weather-related disruptions in January. EIA expects that WTI crude oil prices will average $95/bbl in 2014, $2/bbl higher than last month's STEO, and $90/bbl during 2015. The discount of WTI crude oil to Brent crude oil averaged $8/bbl in February after averaging more than $13/bbl over the previous three months. EIA expects the discount of WTI crude oil to Brent crude oil to average $10/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 June 2014 delivery, traded during the five-day period ending March 6, 2014, averaged $101/bbl. Implied volatility averaged 18%, 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 $87/bbl and $118/bbl, respectively. Last year at this time, WTI for June 2013 delivery averaged $92/bbl and implied volatility averaged 22%. The corresponding lower and upper limits of the 95% confidence interval were $76/bbl and $111/bbl.