Energy Finance

Spot prices for crude oil and petroleum products have increased over the past month, while natural gas prices are still depressed. According to the Energy Information Administration’s Short-Term Energy Outlook report, the price of West Texas Intermediate (WTI) crude oil is expected to average $67 per barrel for the second half of 2009, an increase of about $16 compared with the first half of the year.

The average U.S. price for regular-grade gasoline, at $2.62 per gallon on June 8, was almost 60 cents per gallon higher than its price at the end of April. Regular-grade gasoline prices are expected to reach their summer seasonal peak in July, with a monthly average close to $2.70 per gallon. The annual average regular-grade gasoline retail price in 2009 is expected to be $2.33 per gallon, rising to $2.56 in 2010. The annual average diesel fuel retail prices are expected to be $2.40 and $2.67 per gallon in 2009 and 2010, respectively.

The monthly average Henry Hub gas spot price is expected to stay under $4 per Mcf until late in the year as abundant natural gas supplies converge with weak demand driven by an 8% decline in industrial sector consumption. The price is projected to increase from an average of $4.13 per Mcf in 2009 to an average $5.49 per Mcf in 2010 as expected economic growth boosts industrial consumption of gas.

Based on the current Atlantic hurricane season outlook from the National Oceanic and Atmospheric Administration, EIA estimates expected production shut-ins on the U.S. Gulf Coast during the upcoming hurricane season (June through November) of about 4.5 million barrels of oil and 36 billion cubic feet of gas.

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