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  • www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis

    Energy Prices, Power, and Trade

    for

    The Energy Council

    March 5, 2016 | Washington, D.C.

    by

    Adam Sieminski, Administrator

    U.S. Energy Information Administration

  • Energy Markets Update

    2 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • $/b

    Continued robust supply and increasingly weak economic demand

    continue to pressure crude prices downward

    Source: EIA, Bloomberg

    3 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • $/MMbtu billion cubic feet

    Resilient production and a warm winter have contributed downward

    pressure on U.S. natural gas prices

    Source: EIA

    4 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    -300

    -200

    -100

    0

    100

    200

    300

    400

    500

    600

    700

    1.5

    1.7

    1.9

    2.1

    2.3

    2.5

    2.7

    2.9

    3.1

    3.3

    3.5 Henry Hub futures price (left axis)

    Current storage minus 5-year average (right axis)

  • Forecast

    -3

    -2

    -1

    0

    1

    2

    3

    4

    5

    6

    82

    84

    86

    88

    90

    92

    94

    96

    98

    100

    2011-Q1 2012-Q1 2013-Q1 2014-Q1 2015-Q1 2016-Q1 2017-Q1

    Implied stock change and balance (right axis)

    World production (left axis)

    World consumption (left axis)

    world supply and demand

    million barrels per day

    implied stock change

    million barrels per day

    Global oil inventories are forecast to continue building into 2017

    Source: EIA, Short-Term Energy Outlook, February 2016

    5 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • Crude and products stocks are expected to remain high compared

    to demand in OECD countries

    Note: Colored band around days of supply of crude oil and other liquids stocks represents the range between the minimum and maximum from

    Jan. 2011 - Dec. 2015.

    Source: EIA, Short-Term Energy Outlook, February 2016

    OECD Commercial stocks of crude oil and other liquids

    Days of supply

    6 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    Forecast

    45

    50

    55

    60

    65

    70

    75

    80

    Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017

  • Forecast

    -2

    -1

    0

    1

    2

    3

    4

    5

    6

    7

    8

    9

    76

    78

    80

    82

    84

    86

    88

    90

    92

    94

    96

    98

    2009 2010 2011 2012 2013 2014 2015 2016 2017

    Change in U.S. consumption (right axis)

    Change in China consumption (right axis)

    Change in other consumption (right axis)

    Total world consumption (left axis)

    World liquid fuels consumption

    million barrels per day annual change (mmb/d)

    EIA forecasts global liquids consumption growth at 1.3 million b/d in

    2016 and 1.5 million b/d in 2017

    Source: EIA, Short-Term Energy Outlook, February 2016

    7 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • GDP growth in non-OECD countries

    annual expectations by date of forecast

    Non-OECD economic growth has been lower than expectations

    Source: EIA, Short-Term Energy Outlook

    8 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    0

    1

    2

    3

    4

    5

    6

    7

    Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15

    2013 2014 2015 2016 2017

  • EIA expects WTI oil prices to remain low compared with recent

    history, but the market-implied confidence band is very wide

    Source: EIA, Short-Term Energy Outlook, February 2016

    WTI price

    dollars per barrel

    9 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    0

    25

    50

    75

    100

    125

    150

    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    Historical Spot Price

    STEO Forecast

    NYMEX Futures Price

    Current 95% NYMEX futures price confidence interval

    June 2014 95% NYMEX futures price confidence interval

  • U.S. crude oil price spreads suggest on-land storage is becoming

    more expensive

    Source: Bloomberg

    Crude oil 1st-2nd month spreads

    $/b, 5-day moving average

    10 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • OPEC drives production growth as North American and other

    non-OPEC production declines

    Source: EIA, Short-Term Energy Outlook, February 2016

    World crude oil and liquid fuels production growth

    million barrels per day

    11 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    -0.6

    -0.4

    -0.2

    0.0

    0.2

    0.4

    0.6

    0.8

    1.0

    1.2

    2015 2016 2017

    OPEC countries North America Russia and Caspian Sea

    Latin America North Sea Other Non-OPEC

    Forecast

  • -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016

    monthly percent change

    three month rolling average

    The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    Production growth in top crude producing regions (Permian, Bakken,

    Niobrara, and Eagle Ford) reverses in early 2015

    Source: EIA, Drilling Productivity Report, February 2016

    12

  • Oil company asset write-downs

    Billion 2015$

    Oil companies have written down almost $200 billion worth of assets

    in the past year

    Source: EIA, Evaluate Energy

    13 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

  • Total nonfarm payrolls monthly percent change

    three month moving average

    Source: U.S. Bureau of Labor Statistics

    14 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    Employment growth in energy-producing states has slowed compared

    with other states since the downturn in prices

    -0.80%

    -0.60%

    -0.40%

    -0.20%

    0.00%

    0.20%

    0.40%

    Jan-02 Apr-03 Jul-04 Oct-05 Jan-07 Apr-08 Jul-09 Oct-10 Jan-12 Apr-13 Jul-14 Oct-15

    Total nonfarm payrolls in CO, ND, PA, TX, WV, LA, MT, NM, OH, UT, WY, OK

    Total nonfarm payrolls in all other states

  • billion cubic feet per day

    The U.S. is expected to become a LNG net exporter later this year;

    increased pipeline exports to Mexico reduce pipeline net imports

    Source: EIA, Short-Term Energy Outlook, February 2016

    15 The Energy Council | Energy Prices, Power, and Trade

    March 5, 2016

    -3

    -2

    -1

    0

    1

    2

    3

    4

    5

    6

    J a

    n -1

    3

    M a

    r- 1 3

    M a

    y -1

    3

    J u

    l- 1

    3

    S e p

    -1 3

    N o v -1

    3

    J a

    n -1

    4

    M a

    r- 1 4

    M a

    y -1

    4

    J u

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    S e p

    -1 4

    N o v -1

    4

    J a

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    5

    M a

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    S e p

    -1 5

    N o

    v -1

    5

    J a

    n -1

    6

    M a

    r- 1 6

    M a

    y -1

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    J u

    l- 1

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    S e p

    -1 6

    N o v -1

    6

    J a

    n -1

    7

    M a

    r- 1 7

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