U.S. Energy Information Administration | Short-Term Energy Outlook May 2018 2Natural gasU.S. dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017.EIA forecasts dry natural gas production will average 80.5 Bcf/d in 2018, establishing anew record. EIA expects natural gas production will rise again by 2.9 Bcf/d in 2019 to83.3 Bcf/d.Growing U.S. natural gas production is expected to support increasing natural gasexports in the forecast. EIA forecasts net natural gas exports to increase from 0.4 Bcf/din 2017 to an annual average of 2.0 Bcf/d in 2018 and 4.6 Bcf/d in 2019. EIA estimates that natural gas inventories increased by 22 billion cubic feet (Bcf) in April,ending the month 27% below the five-year average for the end of April. If confirmed inthe monthly data, the April 2018 injection would be the smallest April injection since1983. Preliminary data indicate April temperatures were the coldest for that month inthe past 21 years, which contributed to low injections. Based on EIA’s forecast of risingproduction, natural gas inventories should increase by more than the five-year averagerate of growth during current the injection season (April–October) to reach more than3.5 trillion cubic feet on October 31, which would be 8% lower than the five-yearaverage for the end of October.EIA expects Henry Hub natural gas spot prices to average $3.01/million British thermalunits (MMBtu) in 2018 and $3.11/MMBtu in 2019. NYMEX futures and options contractvalues for August 2018 delivery that traded during the five-day period ending May 3,2018, suggest that a range of $2.32/MMBtu to $3.40/MMBtu encompasses the marketexpectation for August 2018 Henry Hub natural gas prices at the 95% confidence level.Electricity, coal, renewables, and emissions EIA expects the share of U.S. total utility-scale electricity generation from natural gas- fired power plants to rise from 32% in 2017 to 34% in both 2018 and 2019. The forecastelectricity generation share from coal averages 29% in both 2018 and 2019, down from30% in 2017. The nuclear share of generation was 20% in 2017 and is forecast to be 20%in 2018 and 19% in 2019. Nonhydropower renewables provided slightly less than 10% ofelectricity generation in 2017 and are expected to provide more than 10% in 2018 andnearly 11% in 2019. The generation share of hydropower was 7% in 2017 and is forecastto fall slightly below that level both 2018 and 2019. EIA forecasts coal production to decline by 3% to 751 million short tons (MMst) in 2018.The production decrease is largely attributable to a forecast decline of 4% in domesticcoal consumption in 2018, with most of the decline expected to be in the electric powersector. A 9% forecast decline in coal exports also contributes to lower expected coalproduction in 2018. EIA expects coal production to remain nearly unchanged in 2019 at752 MMst.U.S. Energy Information Administration | Short-Term Energy Outlook May 2018 3 In 2017, EIA estimates that wind generated an average of 697,000 megawatthours perday (MWh/d). EIA forecasts that wind generation will rise to 741,000 MWh/d in 2018and to 766,000 MWh/d in 2019. If factors such as precipitation and snowpack remain asforecast, conventional hydropower is forecast to generate 747,000 MWh/d in 2019,making it the first year that wind generation would exceed hydropower generation inthe United States. After declining by 0.9% in 2017, EIA forecasts that energy-related carbon dioxide (CO2)emissions will increase by 1.4% in 2018 and by 0.4% in 2019. Energy-related CO2emissions are sensitive to changes in weather, economic growth, and energy prices.Petroleum and natural gas markets reviewCrude oil Prices:The front-month futures price for North Sea Brent crude oil settled at $73.62 per barrel(b) on May 3, an increase of $5.98/b from April 2. Front-month futures prices for West TexasIntermediate (WTI) crude oil for delivery at Cushing, Oklahoma, increased by $5.42/b during thesame period, settling at $68.43/b on May 3 (Figure 1). April Brent and WTI monthly average spotprices were $6.09/b higher and $3.53/b higher, respectively, than the March average spotprices. At the end of April, crude oil prices reached their highest levels since 2014, following fiveconsecutive quarters of global oil inventory draws. Since January 2017, the beginning of thecrude oil production cut agreement among certain countries within and outside theOrganization of the Petroleum Exporting Countries (OPEC), global petroleum inventories havedeclined at an average rate of more than 0.5 million barrels per day (b/d). Excluding Libya,Nigeria, and Equatorial Guinea— countries not subject to the production reductions—OPEC U.S. Energy Information Administration | Short-Term Energy Outlook May 2018 4countries produced an estimated 29.3 million barrels b/d in April, the lowest levels since April2015 and 0.4 million b/d below the agreed-upon production reductions. Oil prices may have also risen in anticipation of the potential reinstitution of sanctions on Iran,which could contribute to declines in the country’s crude oil production. Uncertaintysurrounding extension of the Joint Comprehensive Plan of Action (JCPOA) could contribute toincreased price volatility.Further, strong global oil demand growth has added to upward price pressures. EIA estimatesthat global oil consumption in the first quarter of 2018 was 1.9 million b/d (2%) higher than itwas in the first quarter of 2017. Backwardation (when near-term prices are higher than longer-dated prices) also increased inApril and reached the highest levels since 2014, indicating high demand for immediate oildeliveries. The Brent and WTI 1st–13th spread increased $1.05/b and $1.50/b, respectively,from April 2 to settle at $5.66/b and $6.23/b, respectively, on May 3 (Figure 2). The increase inthe backwardation of crude oil prices suggests there is an incentive for holders of oil in physicalstorage to sell on spot markets. STEO estimates that U.S. commercial crude oil inventories inApril were 1.5% lower than the five-year average for that month, and total petroleuminventories in countries within the Organization for Economic Cooperation and Development(OECD) are estimated to have ended April slightly below the five-year average. Crude oil price spreads:WTI crude oil priced in Midland, Texas, declined sharply compared withBrent in April. Pipeline constraints in the Permian region continue to contribute to lower crudeoil prices there relative to other regions, as discussed in the April STEO. As production growsbeyond the capacity of existing pipeline infrastructure, producers must use more expensiveforms of transportation, including rail and trucks. As a result, WTI Midland price spreadswidened to the largest discount to Brent since 2014. The WTI Midland differential to Brentsettled at -$17.69/b on May 3, which represents a widening of $9.76/b since April 2 (Figure 3).。。。。。。