The U.S. Energy Information Administration (EIA) on Tuesday released the latest update to its Short Term Energy Outlook (STEO). The agency lowered its average summer driving season price for a gallon of regular gasoline from $2.25 to $2.19 a gallon. After the decrease gas prices are now forecast to be 44 cents per gallon below last summer’s average price.

By the end of 2016 the EIA is forecasting an average U.S. pump price of $1.92 a gallon. The 2016 annual average is now forecast at $2.06 a gallon, down 6 cents from last month’s forecast. The agency’s forecast for 2017 now calls for an average pump price of $2.26 per gallon, up a 2 cents per gallon since last month.

Crude oil production estimates call for an average of 8.7 million barrels a day in 2016 and 8.3 million barrels a day in 2017, both up 100,000 barrels a day from last month’s STEO. The production estimate for last month is 8.6 million barrels a day, down by nearly 200,000 daily barrels compared with July 2015 and 1.1 million daily barrels below the 9.7 million barrel-level reached in April 2015.

The EIA now forecasts a 2016 average price of $42 a barrel for Brent and “slightly less” for WTI crude oil, down $2 a barrel over last month’s estimate. For 2017 the price is expected to rise to $52 a barrel for both types of crude, unchanged in the last two months.

Regarding oil markets the EIA said:

Longer-dated domestic prices did not fall as much as those in the front of the futures price curve, contributing to a wider contango (when near-term prices are lower compared with further-dated ones). The WTI 1st – 13th [month] spread declined $1.15/b since July 1, settling at -$5.47/b on August 4 (Figure 2). Crude oil inventories in Petroleum Administration for Defense District (PADD) 3 plus Cushing, Oklahoma, declined 3.9 million barrels from June to July, significantly less than the five-year average decline of 7.7 million barrels, likely providing more downward pressure to the front of the WTI futures curve. The shape of the Brent futures curve was relatively unchanged, with the 1st-13th spread declining by 1 cent per barrel to settle at -$4.30/b on August 4.

Natural gas working inventories totaled 3.288 trillion cubic feet (Tcf) on July 29. Injections into storage have been smaller than last summer, but a milder U.S. winter left a larger-than-usual amount of gas in storage at the beginning of the injection season. EIA projects natural gas inventories will reach 4.042 Tcf at the end of October 2016, an increase of 20 billion cubic feet from the prior month’s projection and the highest end-of-October level on record. Spot prices are forecast to average $2.41 per million BTUs in 2016 and $2.95 per million BTUs in 2017, compared with an average of $2.63 per million BTUs in 2015.

The latest STEO data weighed on WTI futures, sending them down to around $42.80 after touching a high of $43.52 earlier Tuesday morning.

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