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

3.5Henry 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

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

l-1

3

Sep

-13

Nov-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Ju

l-1

4

Sep

-14

Nov-1

4

Ja

n-1

5

Ma

r-15

Ma

y-1

5

Ju

l-1

5

Sep

-15

No

v-1

5

Ja

n-1

6

Ma

r-16

Ma

y-1

6

Ju

l-1

6

Sep

-16

Nov-1

6

Ja

n-1

7

Ma

r-17

Ma

y-1

7

Ju

l-1

7

Sep

-17

Nov-1

7

LNG Net imports

Pipeline net imports

$/MWh

Natural gas is increasingly competitive with coal in the eastern United

States

Source: Bloomberg

Note: Prices compared using average energy content and efficiency rates

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

March 5, 2016

thousand megawatthours per day

This has led to some months with higher generation from natural gas,

which is expected to remain close with coal throughout 2017

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

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

March 5, 2016

0

1,000

2,000

3,000

4,000

5,000

6,000D

ec-1

1

Ma

r-12

Ju

n-1

2

Sep

-12

Dec-1

2

Ma

r-13

Ju

n-1

3

Sep

-13

Dec-1

3

Ma

r-14

Ju

n-1

4

Sep

-14

Dec-1

4

Ma

r-15

Ju

n-1

5

Sep

-15

Dec-1

5

Ma

r-16

Ju

n-1

6

Sep

-16

Dec-1

6

Ma

r-17

Ju

n-1

7

Sep

-17

Dec-1

7

Electric Power Sector Generation from Natural Gas

Electric Power Sector Generation from Coal

U.S. electricity net generation

trillion kilowatthours

Renewables and natural gas together account for 66% of generation in

2040 while coal’s share falls to 18%

Source: EIA current thinking; preliminary results subject to change

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

March 5, 2016

New EIA features and tools

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

March 5, 2016

New natural gas storage regions

Source: EIA, Weekly Natural Gas Storage Report

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

March 5, 2016

Consuming

West Consuming

East

Producing

old regions

Pacific

Mountain

Midwest

East

South

Central

new regions

Oklahoma crude oil production

thousand barrels per day

EIA improves monthly reporting of crude oil production

Source: EIA and data from the Oklahoma Tax Commission and Corporation Commission, as compiled by DrillingInfo

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

March 5, 2016

A redesigned U.S. oil and natural gas production page provides

interactive graphics, state tables, and more

The Energy Council | Energy Prices, Power, and Trade

March 5, 2016 22

Available to the public:

- Interactive graphics

- Monthly estimates of crude oil and natural gas by state

- Comparisons with prior months and with prior estimation

methods

- Downloadable historical data

- Statistical measures of errors for each estimate

- Methodology report

- Links to other EIA data and analyses

http://www.eia.gov/petroleum/production/

EIA and DOE collaborating with Mexico and Canada to coordinate

energy information and analysis

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

March 5, 2016

For more information

U.S. Energy Information Administration home page | www.eia.gov

Annual Energy Outlook | www.eia.gov/aeo

Short-Term Energy Outlook | www.eia.gov/steo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Today in Energy | www.eia.gov/todayinenergy

State Energy Profiles | www.eia.gov/state

Drilling Productivity Report | www.eia.gov/petroleum/drilling/

International Energy Portal | www.eia.gov/beta/international/?src=home-b1

24

The Energy Council | Energy Prices, Power, and Trade

March 5, 2016