Forecast Highlights

Global liquid fuels

• U.S. crude oil production averaged 9.4 million barrels per day (b/d) in 2015, and it is forecast to average 8.9 million b/d in 2016 and 8.8 million b/d in 2017.

• EIA forecasts Brent crude oil prices to average $43 per barrel (b) in 2016 and $52/b in 2017. West Texas Intermediate (WTI) crude oil prices are forecast to average about $1/b less than Brent prices in 2017. The values of futures and options contracts indicate significant uncertainty in the price outlook. The NYMEX contract values for March 2017 delivery traded during the five-day period ending December 1 suggest that a range from $34/b to $71/b encompasses the market expectation of WTI prices in March 2017 at the 95% confidence level.

• Lower crude oil prices contributed to U.S. average retail regular gasoline prices in November averaging $2.18 per gallon (gal), a decline of 7 cents/gal from the October level. EIA expects gasoline prices to fall to an average of $2.10/gal in January. Retail gasoline prices are forecast to average $2.14/gal in 2016 and $2.30/gal in 2017.

• Global oil inventory builds are forecast to average 0.7 million b/d in 2016 and 0.4 million b/d in 2017.

Natural gas

• Natural gas marketed production is forecast to average 77.5 billion cubic feet per day (Bcf/d) in 2016, a 1.3 Bcf/d decline from the 2015 level, which would be the first annual production decline since 2005. In 2017, forecast natural gas production increases by an average of 2.5 Bcf/d from the 2016 level.

• Growing domestic natural gas consumption, along with higher pipeline exports to Mexico and liquefied natural gas exports, contribute to the Henry Hub natural gas spot price rising from an average of $2.49 per million British thermal units (MMBtu) in 2016 to $3.27/MMBtu in 2017. NYMEX contract values for March 2017 delivery traded during the five-day period ending December 1 suggest that a price range from $2.20/MMBtu to $5.04/MMBtu encompasses the market expectation of Henry Hub natural gas prices in March 2017 at the 95% confidence level.

Electricity, coal, renewables, and emissions

• Total U.S. electricity generation from utility-scale plants averaged 11,172 gigawatthours per day in 2015. Forecast U.S. generation grows by 0.2% in 2016 and by 0.7% in 2017.

• EIA expects the share of U.S. total utility-scale electricity generation from natural gas will average 34% this year, and the share from coal will average 30%. In 2015, both fuels supplied about 33% of total U.S. electricity generation. In 2017, natural gas and coal are forecast to generate 33% and 31% of electricity, respectively. Nonhydropower renewables are forecast to generate 8% of electricity generation in 2016 and 9% in 2017. Generation shares of nuclear and hydropower are forecast to be relatively unchanged from 2016 to 2017.

• Coal production in November 2016 was 70.7 million short tons (MMst), the third time this year monthly production exceeded 70 MMst. Monthly coal production exceeded 70 MMst nine times in 2015 and in every month in 2014. Forecast annual coal production declines by 15% to 758 MMst in 2016, which would be the lowest level of coal production since 1978. Coal production is forecast to increase by 2% in 2017.

• Despite recent increases in global coal prices, spot U.S. coal prices have remained unchanged for the past six weeks. The delivered coal price averaged $2.23/MMBtu in 2015. Forecast coal prices average $2.14/MMBtu in 2016 (a 4% decline) and $2.21/MMBtu in 2017 (a 3% increase).

• Wind energy capacity at the end of 2015 was 72 gigawatts (GW). EIA expects capacity additions of 7 GW in 2016 and 9 GW in 2017. These additions would bring total wind capacity to 89 GW by the end of 2017.

• On November 23, 2016, the U.S. Environmental Protection Agency (EPA) finalized a rule setting Renewable Fuel Standard (RFS) volumes for 2017. EIA used the final volumes to develop the current STEO forecast. EIA expects that the largest effect of the finalized 2017 RFS targets will be on biomass-based diesel consumption, which includes both biodiesel and renewable diesel and helps to meet the RFS targets for use of biomass-based diesel, advanced biofuel, and total renewable fuel. Biodiesel production averaged 82,000 b/d in 2015, and it is forecast to average 99,000 b/d in 2016 and 104,000 b/d in 2017. Net imports of biomass-based diesel are expected to rise from 31,000 b/d in 2015 to 45,000 b/d in 2016 and to 51,000 b/d in 2017. Projected ethanol consumption averages about 940,000 b/d in both 2016 and 2017, resulting in the ethanol share of the total gasoline pool averaging 10% in both years.

• After declining by 2.6% in 2015, energy-related carbon dioxide (CO2) emissions are projected to decline by 1.3% in 2016 and then increase by 0.9% in 2017. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.