Highlights

• EIA expects that the Brent crude oil spot price will average $110 per barrel in the fourth quarter of 2012, while the West Texas Intermediate (WTI) crude oil spot price will average $89 per barrel. The Brent and WTI crude oil spot prices are forecast to average $104 per barrel and $88 per barrel, respectively, in 2013. The projected WTI discount to Brent crude oil, which averaged $23 per barrel in November 2012, falls to an average of $11 per barrel by the fourth quarter of 2013. This forecast rests on the assumption that U.S. real gross domestic product (GDP) grows by 2.1 percent in 2012 and 1.8 percent in 2013, while world-oil-consumption-weighted real GDP grows by 2.7 percent and 2.4 percent in 2012 and 2013, respectively.

• U.S. monthly average regular gasoline retail prices fell from $3.85 per gallon in September to $3.45 per gallon in November, as crude oil prices fell and the gasoline market transitioned from summer-grade to lower-cost winter-grade gasoline specifications. Projected national average regular gasoline retail prices average $3.63 per gallon in 2012 and $3.43 per gallon in 2013, compared with $3.53 per gallon in 2011. Forecast diesel fuel retail prices average $4.02 per gallon during the fourth quarter of 2012 before falling to an average of $3.84 per gallon in 2013.

• EIA's projections of average household fuel bills this winter have not changed significantly from last month's STEO. EIA expects household expenditures for space heating fuels will be higher this winter than last winter, primarily because of the return to roughly normal winter temperatures east of the Rocky Mountains compared with last winter's unusual warmth. Average expenditures for households that heat with heating oil are forecast to be higher than any previous winter on record.

• EIA expects U.S. total crude oil production to average 6.4 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year. Projected domestic crude oil production increases to 7.1 million bbl/d in 2013, 0.2 million bbl/d higher than projected in last month's STEO and the highest annual average rate of production since 1992.

• Natural gas working inventories, which reached an all-time weekly record in early November, ended the month at an estimated 3.8 trillion cubic feet (Tcf), almost equal to the level at the same time last year. EIA expects the Henry Hub natural gas spot price, which averaged $4.00 per million British thermal units (MMBtu) in 2011, will average $2.78 per MMBtu in 2012 and $3.68 per MMBtu in 2013.