Demand for oil will likely increase for this year but dip in 2017, according to the latest "Short-Term Energy Outlook" released on Tuesday by the United States' Energy Information Administration.
The EIA forecast that oil demand for 2016 would grow by 10,000 barrels per day to around 1.45 million bpd. Thus, overall crude production is anticipated to average around 8.7 million bpd, Oil Price reported.
In addition, the price of Brent crude this year is expected to average $42 per barrel, while West Texas Intermediate crude oil prices are forecast to be slightly less than Brent.
With regard to 2017, the EIA cut demand growth by 40,000 bpd to 1.45 million bpd. Crude production will continue to falter and descend to 8.3 million bpd, which represents a drop of around 1.1 million bpd compared to the 9.4 million bpd extracted in 2015.
This may help explain why the average price of US gasoline is expected to spike from $2.06 per gallon to $2.26 in 2017, and why diesel will become more expensive with a $0.40 annual jump to $2.70 next year. Aside from oil, the EIA estimates the amount of electricity generated using natural gas reached a record high in July compared to the record set 12 months prior.
“The record natural gas-fired generation was driven by competitive economics compared with coal despite recent natural gas price increases and by warmer-than-normal temperatures that boosted overall electricity generation,” said an EIA summary of the study.
