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FUELS EIA N E W S 16 DECEMBER 2015 | FUEL OIL NEWS | www.fueloilnews.com values. For example, a cold winter could substantially increase expenditures for heating oil consumers. EIA runs a win- ter weather scenario that calculates what expenditures would be if temperatures are 10% colder than forecast. In this scenario, EIA projects that the average household using heating oil would spend $1,560 for heating bills during winter 2015-16, $170 more than in the base temperature case. However, even in 10% colder scenario, heating oil expenditures are forecast to be less than last winter's average expenditures. One of the main factors driving heat- ing fuel expenditures this winter will be the price of crude oil. As the main cost for producing refined products, changes in crude oil costs can have a large effect on retail prices for heating oil. EIA forecasts that West Texas Intermediate crude oil prices in January will average $48/b. However, the current values of futures and options contracts continue to suggest high uncertainty in the price out- look. WTI futures contracts for January 2016 delivery, traded during the five- day period ending October 1, averaged $46/b, while implied volatility averaged 43%. These levels established the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in January 2016 at $32/b and $67/b, respectively. While there is not sufficient liquidity in the Brent options market to do a simi- lar calculation for Brent crude, based on EIA's Brent-WTI forecast price differen- tial, one could assume that the upper and lower limits of the confidence band for Brent would be roughly $5/b above those for WTI. Several factors could push prices lower or higher than forecast, including the pace of global economic growth, the responsiveness of non-OPEC oil produc- tion to the low price environment, and any unplanned production outages. As the price of crude oil changes, prices of wholesale, and ultimately retail, heating oil adjust to reflect crude oil costs. All other factors being equal, a $1-per- barrel change in the price of crude oil will result in a change of 2.4 cents per gallon in the price of wholesale and retail heat- ing oil. EIA: As U.S. Propane Production and Export Capacity Expand The combination of significant U.S. propane produc- tion increases over the past seven years and relatively slow domestic demand growth has reversed historical trade positions. Propane exports from the United States are changing traditional propane market pat- terns across the globe. The initial growth in U.S. propane production, between 2008 and 2010, caused a reduction in depen- dence on propane imports, with net imports falling from an average of 109,000 barrels per day (b/d) in 2008 to a near-balance of 16,000 b/d in net exports in 2010. By 2011, only Canada remained as a major supplier of imported propane into the United States, with overseas imports relegated to occasional seasonal shipments into the Northeast and delivery to Hawaii. As propane production and export capacity contin- ued to grow, so did the reach of U.S. propane exports. Demand for U.S. propane exports is driven by favorable pricing for U.S. propane compared with the international market, where prices are typically set by the Saudi Aramco monthly contract price (ACP). Saudi Aramco generally bases its propane price on naphtha, a light petroleum product created through the processing of crude oil in a refinery and Excerpted from This Week in Petroleum- Oct. 28, 2015