click image to zoom In its May Short-Term Energy Outlook (STEO), EIA forecasts that the spot price of North Sea Brent crude oil will fall through the remainder of 2014, declining from current levels of $108 per barrel (bbl) to average $103/bbl during the fourth quarter (Figure 1). For full-year 2014, EIA expects the Brent price to average $106/bbl, down $2 from the 2013 average, but more than $1 higher than last month´s forecast. EIA expects crude prices to decline through the end of the year as demand for OPEC crude falls to offset the combined increases in non-OPEC total liquids supply and OPEC noncrude supply, which are projected to exceed growth in world liquids demand. Since mid-2013, Brent prices have been relatively stable. In April, the Brent spot price averaged $108/bbl, the 10th consecutive month Brent prices averaged between $107/bbl and $112/bbl. This stability results in part from growing U.S. crude oil production from tight oil plays that has made crude oil previously imported to the United States available to the global market. Higher U.S. production has helped to offset relatively high levels of unplanned supply disruptions in 2013-14. In April, global unplanned supply disruptions averaged 3.2 million bbl/d, about 0.6 million bbl/d higher than the 2013 average. OPEC countries accounted for 2.6 million bb/d of the global total.
EIA expects Brent prices to gradually move below the $107-$112/bbl range during the second half of the year, averaging $106/bbl during the third quarter and $103/bbl during the fourth quarter. The projected larger fourth-quarter price decline is the result of non-OPEC liquids and OPEC noncrude liquids supply increasing by 120,000 bbl/d and 30,000 bbl/d, respectively, from the third quarter, while global consumption is expected to remain flat. Flat consumption and growing non-OPEC supply will lower the call on OPEC crude oil and global inventories. As a result, EIA expects OPEC surplus production capacity, which is concentrated in Saudi Arabia, to average 2.8 million bbl/d in the fourth quarter, an increase of 0.6 million from the third quarter. Combined, these factors are expected to put moderate downward pressure on prices.
Gasoline and diesel fuel prices decrease
The U.S. average retail price of regular gasoline decreased three cents to $3.68 per gallon as of May 5, 2014, 15 cents higher than last year at this time. Prices decreased in all regions of the nation except the Rocky Mountains, where the average rose by two cents to $3.50 per gallon. The largest gasoline price decrease occurred in the Midwest, where prices fell seven cents to $3.60 per gallon. The Gulf Coast price decreased three cents to $3.47 per gallon, while the West Coast price was $4.06 per gallon, down two cents from last week. The East Coast price decreased by a penny to $3.70 per gallon.