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www.fueloilnews.com | FUEL OIL NEWS | JANUARY 2016 13 Principal contributor: Steven Grape EIA: U.S. Oil and Natural Gas Reserves Both Increase in 2014 U.S. crude oil and lease condensate proved reserves increased by 9% to 39.9 billion barrels, and natural gas proved reserves increased by 10% to 389 trillion cubic feet in 2014, according to EIA's U.S. Crude Oil and Natural Gas Proved Reserves report. U.S. crude oil and lease condensate proved reserves reached the highest level since 1972, and natural gas proved reserves sur- passed last year's record level. Proved reserves are volumes of oil and natural gas that geologic and engineer- ing data demonstrate with reasonable certainty to be recoverable under exist- ing economic and operating conditions. Because they depend on economic fac- tors, proved reserves shrink or grow as commodity prices and extraction costs change. EIA's estimates of proved reserves are based on an annual survey of domestic oil and natural gas well operators. Texas had the largest increase in proved reserves of crude oil and lease con- densate, representing 60% of the nation's total net increase in 2014. This increase was driven by development of tight oil plays (e.g., Wolfcamp, Bone Spring) in the Permian Basin and the Eagle Ford Shale play. North Dakota had the second-largest increase, 362 million barrels, which came mostly from the Bakken tight oil play in the Williston Basin. Proved natural gas reserves were added onshore in the Lower 48 states in several of the nation's shale forma- tions, particularly the Marcellus Shale play in Pennsylvania and West Virginia, the Eagle Ford Shale play in Texas, the Woodford Shale play in Oklahoma, and the Utica Shale play in Ohio. Natural gas in shale plays now represents slightly more than half the U.S. total natural gas proved reserves. Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves] Short-Term Energy Outlook Here are highlights from the Short-Term Energy Outlook released on Dec. 8 by the Energy Information Administration: North Sea Brent crude oil prices averaged $44/barrel in November, a $4/b decrease from October. Global oil inven- tories are estimated to have increased by 1.3 million barrels per day in November, putting downward pressure on Brent prices. EIA forecasts that Brent crude oil prices will average $53/b in 2015 and $56/b in 2016. Forecast West Texas Intermediate (WTI) crude oil prices aver- age $4/b lower than the Brent price in 2015 and $5/b lower in 2016. The current val- ues of futures and options contracts for March 2016 delivery (Market Prices and Uncertainty Report) suggest the market expects WTI prices to range from $30/b to $63/b (at the 95% confidence interval). The monthly average price of U.S. regular retail gasoline was $2.16/gallon in November, a decrease of 13 cents/gal from October and 75 cents/gal lower than in November 2014. EIA forecasts U.S. regular gasoline retail prices to average $2.04/gal in December 2015 and $2.36/ gal for 2016. EIA estimates that total U.S. crude oil production declined by about 60,000 b/d in November compared with October. Crude oil production is fore- cast to decrease through the third quarter of 2016 before growth resumes late in 2016. Projected U.S. crude oil production averages 9.3 million b/d in 2015 and 8.8 million b/d in 2016. Natural gas working inventories were a record 4,009 billion cubic feet on November 20. On November 27, inven- tories were 16% higher than during the same week last year and 7% higher than the previous five-year average (2010-14) for that week. EIA expects the Henry Hub natural gas spot price to average $2.47/ million British thermal units this winter (October 2015-March 2016) compared with $3.35/MMBtu last winter. Global oil inventories are estimated to have increased by 1.3 million barrels per day in November, putting downward pressure on Brent prices.