What were the key energy commodity price trends in 2012?

Source: U.S. Energy Information Administration based on Bloomberg, L.P.
Note: Price changes are derived by taking the difference in prompt contract price for each commodity between January 1 and December 31, 2012. This method allows for comparisons of different commodity classes on a consistent basis. PRB Coal is Powder River Basin Coal. CAPP Coal is Central Appalachia Coal. WTI is West Texas Intermediate, a benchmark for both physical and financial crude oil pricing located in Cushing, Oklahoma. RBOB Gasoline is a kind of gasoline based on a reformulated blendstock for oxygenate blending (RBOB).

Coal and mid-continent crude oil (WTI) led energy commodity price declines in 2012. Natural gas was the only key energy commodity with a significant price increase when comparing January 1 to December 31. Heating oil, Brent crude oil, and wholesale gasoline (RBOB) ended 2012 close to the level at which they started the year(see graphs, right side).

In 2012, average prices for crude oil and petroleum products were largely close to the 2011 averages, with some fluctuations throughout the year. Natural gas prices declined through the early portion of 2012 but then increased in the early fall and winter. Prices for Central Appalachian (CAPP) and Powder River Basin (PRB) coal declined at the beginning of 2012 and remained significantly below the average levels of 2011.

This article provides an overview of a series of related articles (see Today in Energy, 2012 Briefs) on energy market trends in 2012. To ensure comparability among commodities, the prices shown here reflect near-month contracts of futures prices. Most other articles in this series focused on spot market trends. Some key findings from these articles include:

Crude oil and petroleum products

Brent crude oil averaged $111.67 per barrel in 2012, edging past last year's average price of $111.26 per barrel and marking the second year in a row that the global oil benchmark averaged more than $100 per barrel.West Texas Intermediate crude oil averaged $94.05 per barrel in 2012, down slightly from $94.88 in 2011. The annual average price gap between Brent and WTI reached $17.61 per barrel, up from the 2011 level of $16.38.The national weekly average pump prices for gasoline and diesel fuel during 2012 set record highs of $3.62 and $3.97 per gallon, respectively, and marked the second year in a row that the average price for either transportation fuel failed to drop below $3 per gallon during any week.

See related article – Today in Energy, January 10, 2013 and January 11, 2013

Natural Gas

Average, spot natural gas prices were lower compared to 2011, however both futures and spot prices increased in the latter half of the year.Natural gas prices were generally uniform across the country, except when residential and commercial demand peaked during the colder winter months. During these periods, pipeline constraints into the Northeastern United States led to increased separation of the average natural gas wholesale (spot) prices at major hubs in New England and New York above the average spot price at Henry Hub.

See related article – Today in Energy, January 8, 2013

Electricity

Average, spot, on-peak wholesale electricity prices were lower across the United States and largely followed the trend in natural gas prices. Several short-term price spikes occurred during the summer months in several U.S. regions as electric demand increased to meet summer air-conditioning load.

See related article – Today in Energy, January 9, 2013

Coal

Wholesale (spot) coal prices across all basins fell during the first half of 2012, with steep declines in Powder River Basin (PRB) and Eastern basins, before stabilizing in the latter half of the year.Record exports of both thermal and metallurgical coal helped offset declines in consumption in the power sector.

See related article – Today in Energy, January 14, 2013

Natural Gas Liquids

Daily spot prices for natural gas liquids (NGL)–ethane, propane, normal butane, isobutane, and natural gasoline–were generally down in 2012. Ethane and propane, the lower-priced NGL, experienced the largest percentage declines relative to 2011 average prices. Prices for natural gasoline, isobutane, and normal butane more closely track oil prices.

See related article – Today in Energy, January 15, 2013

A futures market is a trade center for quoting prices on contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future. Futures markets reflect price expectations rather than current prices. The 'near-month contract' reflects the most immediate price expectation.

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