DoE slightly reduces forecast for US oil production next year

US oil production will be slightly lower than previously projected next year, but so too will the average price of retail gasoline prices Stateside.

The country’s output of crude averaged 9m barrels of oil per day (bopd) in November and is now seen reaching 9.3m bopd in 2015, according to estimates from the Energy Information Administration (EIA) contained in its latest short-term Energy Outlook (STEO) report.

In the report the EIA also highlights the significant increase seen in the levels of implied volatility – one measure of risk in financial markets - in futures contracts for crude oil.

As per current pricing in the futures market the lower and upper bounds of the most likely price range for crude in March 2015 lies at between $51 and $89 per barrel.

The US Department of Energy’s statistical arm also projected that retail gasoline prices in the US will fall to $2.6 per gallon next year, from $3.37 per gallon last year. That is 35 cents a gallon less than the price estimate contained in the previous STEO.

If projections for near-normal winter temperatures this year pan out then the lower crude oil prices should help reduce households’ expenditures on heating oil by 27% over the coming months by 27% ($632) in comparison to the last winter.