Oil prices to drop below $80 per barrel, EIA Fuel prices

Both the crude oil price per barrel as well as the average fuel price per gallon are expected to drop this summer, according to the U.S. Energy Information Administration’s latest short-term energy outlook.

According to the May 9 outlook, the Brent spot price will average $79 per barrel in 2023, a 9% drop from what EIA forecast in its April outlook. The forecast for diesel took a dip of almost 5% to an average of $3.90 per gallon for 2023. By 2024, that price could drop to $3.62 per gallon, according to EIA’s forecast model.

However, it wasn’t all good news as the EIA is also forecasting a summer surge in electric prices perhaps only surpassed by last year’s record-breaking prices.

Much of this expectation depends on summer weather conditions, with May 2023 being the first EIA outlook to include a 30-year weather trendline as well as the National Oceanic and Atmospheric Administration’s forecast.

“Our forecast for the consumption of electricity and for the amount Americans pay for electricity this summer is highly dependent on weather,” Joe DeCarolis, EIA administrator, said. “If this summer turns out to be warmer than we expect, we will see more demand for air conditioning, greater electricity use, and higher bills.”

EIA has increased its forecast for natural gas consumption for electricity to the second-most on record. Electricity generation from wind and solar is expected to increase as is hydropower generation due to a wet winter in California, EIA said.

The current STEO forecast was released May 9.
The previous STEO forecast was released April 11.

The full EIA short-term energy outlook is available here. LL

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