Recently, the Energy Information Administration released its weekly reports on the status of various liquid fuels in the United States, covering the week that ended November 1. The reports cover natural gas and petroleum, presenting data about the production, storage, and prices of the fuels. Changes in the data can reflect natural variations, seasonal trends, long-term market effects, and current events in regions of the globe where liquid fuels are produced, processed, and sold. This week was highlighted by continued slackness in U.S. demand for oil, as well as the possibility of talks between Iran and other world powers over the country’s nuclear program.
Working natural gas in storage — the volume readily available to the market — increased by 35 billion cubic feet in the week ended November 1 to 3,814 Bcf, according to EIA estimates. This is down by 112 Bcf from the same period last year, putting them slightly above the five-year historical average. As of Thursday, futures traded at $3.498/mmBTU, below the $4 to $6 range within which producers can both earn a profit remain and compete with alternative fuels such as coal.
The data shows a trend has developed over the past few years. Inventories have been on the rise as domestic production increases, largely thanks to advances in horizontal drilling and hydraulic fracturing technology. These advances have contributed to a revolution in energy production in the U.S. and producers are rapidly helping make the dream of energy independence come true. Domestic production supplied the U.S. with 84 percent of its total energy needs in 2012, the highest level since 1991. The EIA estimates that the U.S. could become a net exporter of natural gas as early as 2020, assuming regulatory hurdles can be overcome.
U.S. crude oil refinery inputs averaged about 15.1 million barrels per day during the week ending November 1, with refineries operating at 86.8 percent capacity. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.6 million barrels from the previous week.
At 385.4 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. This week’s gains were not so much as the 1.9 million barrels that were expected by analysts.
WTI, a grade of crude oil used as a benchmark in oil pricing, was $94.56 per barrel, $2.84 less than last week’s price but $9.66 more than a year ago. The price of oil has been falling as U.S. demand has been less than was generally expected for this time of year. Prices in oil futures have risen steadily since 2012 due to steady increases in demand from both developed and developing countries.
As the EIA put it, “All else equal, changes in gasoline prices follow changes in crude prices.” For the week ended November 4, the average retail price of a gallon of gasoline in the U.S. was $3.265. This is down over 22 cents from the year-ago period, and down over 2 cents since last week. It is also down from the summer-to-date peak of $3.68, which was hit on July 22.
Earlier in August, the EIA projected that oil and gas prices would decline throughout 2014 — with regular gasoline approaching $3.00 per gallon by the end of the year. Thanks to increased production in the U.S. and other non-OPEC countries, prices could very well still continue with tension in countries such as Syria and Iran appearing to dissipate.