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Crude oil prices increased in 2016, still below 2015 averages

crude oil prices

Source: U.S. Energy Information Administration, based on Thompson Reuters Crude oil prices

 EIA estimates OPEC crude oil and other liquids production increased 3% to 39.3 million b/d in 2016

Crude oil prices ended the year above $50 per barrel. Although the annual average West Texas Intermediate (WTI) crude oil price in 2016 was $43/b—down $5/b from 2015—the WTI price ended 2016 at $53/b, $16/b higher than at the end of 2015, according to the US Energy Information Administration.

Similarly, Brent ended the year up $17 from the end of 2015, at $54/b, but the 2016 annual average of $44/b was $8 below the 2015 average.

Despite robust demand for petroleum products, relatively high production and inventory levels provided downward pressure on crude oil prices throughout most of 2016.

However, recent agreements to curb production over the next six months within the Organization of the Petroleum Exporting Countries (OPEC) and additional pledges by some key non-OPEC producers put upward pressure on prices at the end of 2016 as markets appear to be anticipating tighter balances than previously forecast.

crude oil prices

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, December 2016

U.S. highlights for 2016

  • US crude oil production was lower in 2016 than in 2015 by more than 500,000 b/d using estimates from the Dec. Short-Term Energy Outlook (STEO). The decrease was driven by reductions in Lower 48 onshore production, with an estimated decline in production from 2015 to 2016 of nearly 700,000 b/d. Despite the decline, production of crude oil is forecast to average 8.9 million b/d in 2016, the second highest level since 1985.
  • The Brent-WTI price spread averaged less than $1/b in 2016, significantly below the 2015 average spread of $3.45/b.
crude oil prices

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  • Based on data through Sept. 2016, average U.S. imports of crude oil increased by more than 500,000 b/d from 2015 to 7.9 million b/d, the highest level since 2012. The United States imported the three largest volumes of crude oil from Canada, Saudi Arabia, and Venezuela.
  • The number of countries receiving US crude oil exports has risen since restrictions on exporting U.S. crude oil were lifted in Dec. 2015. Despite declines in domestic production, total crude oil exports for 2016 were up, with estimates through Oct. 2016 totaling more than 500,000 b/d, an increase of more than 30,000 b/d from the same period in 2015.

International highlights for 2016

  • EIA estimates that total OPEC crude oil and other liquids production increased 3 per cent to 39.3 million b/d in 2016.
  • At the Nov. 30 OPEC meeting, member countries agreed to reduce production by approximately 1.2 million b/d from an October baseline to lower OPEC’s production ceiling to 32.5 million b/d beginning Jan. 1, 2017.
  • Non-OPEC countries met following OPEC’s agreement and agreed to cut production by 558,000 b/d, with Russia making the largest cuts of approximately 300,000 b/d.

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