After declining to a 2013 year-to-date low of $97 per barrel on April 17, Brent crude oil spot prices increased to an average of $103 per barrel in May. EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $105 per barrel and $100 per barrel in 2013 and 2014, respectively, reflecting the increasing supply of liquid fuels from non-OPEC countries. After averaging $94 per barrel in 2012, the forecast WTI crude oil spot price averages $93 per barrel in 2013 and $92 per barrel in 2014. By 2014, several pipeline projects from the midcontinent to the Gulf Coast refining centers are expected to come on line, reducing the cost of transporting crude oil to refiners, which is reflected in a narrowing in the price discount of WTI to Brent.
Energy price forecasts are highly uncertain (Market Prices and Uncertainty Report). WTI futures contracts for September 2013 delivery traded during the five-day period ending June 6, 2013 averaged $93.75 per barrel. Implied volatility averaged 23 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in September 2013 at $77 per barrel and $114 per barrel, respectively. Last year at this time, WTI for September 2012 delivery averaged $85 per barrel and implied volatility averaged 35 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $63 per barrel and $115 per barrel.