|
EIA expects stronger spring crude market Oil prices still fluctuating; $81 per barrel average expected in second half of 2010, $84 in 2011; forecast good for natural gas Petroleum News
While crude oil prices continue to fluctuate, the U.S. Energy Information Administration expects the crude oil market to strengthen this spring, with West Texas Intermediate crude oil prices averaging about $81 per barrel in the second half of the year and $84 in 2011.
In its Feb. 10 short-term energy outlook EIA noted that from Dec. 14 to Jan. 6 the WTI price increased from $69.48 per barrel to $83.12, and then fell to $72.85 on Jan. 29.
EIA’s crude oil forecast is unchanged from January based on a growth in U.S. real gross domestic product of 2.3 percent this year and 2.5 percent in 2010.
The world oil-consumption-weighted real GDP is expected to grow by 2.7 percent this year and 3.6 percent in 2011.
The annual average price for regular-grade gasoline is expected to increase from $2.35 per gallon in 2009 to $2.84 in 2010 and $2.97 in 2011 “because of the rising average crude oil price forecast,” EIA said, adding that pump prices may exceed $3 per gallon at times this spring and summer.
The Henry Hub spot price for natural gas is expected to average $5.37 per million Btu this year, up $1.42 per million Btu over the 2009 average of $3.95, with an increase in 2011 to $5.86. EIA said working gas inventories are expected to end the first quarter at some 1.644 trillion cubic feet, compared to the 1.734 tcf forecast in January, because weather in January was colder than normal.
Oil market projected to tighten EIA said it expects the world oil market to “gradually tighten in 2010 and 2011, as the global economic recovery continues and world oil demand begins to grow again.”
While continuation of Organization of the Petroleum Exporting Countries’ production targets and lower overall non-OPEC supply growth in 2010-11 would also contribute to a firming of crude oil prices to above $80 this summer, EIA said a tendency toward any large upward swing in prices will be dampened by high inventories among Organization for Economic Cooperation and Development countries and by ample OPEC surplus production capacity.
The agency has revised its outlook for global liquid fuels consumption upward to a growth of 1.2 million barrels per day this year and a growth of 1.6 million bpd in 2011 after declines in 2008 and 2009, with non-OECD countries expected to account for the majority of the growth in both 2010 and 2011.
In 2009 supply from non-OPEC countries increased by 560,000 bpd, “the largest annual increase since 2004,” EIA said. The 2010 non-OPEC projected increase is 430,000 bpd, with the largest source in 2010 the United States followed by Brazil and Azerbaijan. Production is forecast to decline in Mexico, the United Kingdom and Norway, with non-OPEC supply falling by 120,000 bpd in 2011, “as declining production in mature areas overwhelms any new production growth.”
Spare capacity way up One reason WTI prices stabilized between $70 and $80 per barrel in the middle of last year is that OPEC cut its crude oil production by 2.2 million bpd in 2009, EIA said. OPEC’s spare production capacity, most of it concentrated in Saudi Arabia, stands at some 5 million bpd and could grow to 6 million bpd, EIA said. Between 1999 and 2009, OPEC surplus capacity averaged 2.8 million bpd.
EIA said it expects annual OPEC production to increase by an average of 400,000 bpd this year and again in 2011 as global oil demand recovers. OPEC non-crude petroleum liquids, which are not subject to production targets, are expected to grow by 600,000 to 700,000 bpd each year through 2011, for a total of up to 2.2 million bpd of increased OPEC liquids production over the next two years.
OECD commercial oil inventories were 2.69 billion barrels at the end of 2009, some 90 million barrels more than the five-year average for that time of year.
Natural gas consumption expected to grow U.S. natural gas consumption is expected to increase 0.4 percent to 62.5 billion cubic feet per day this year and by the same percentage in 2011, EIA said, while total U.S. marketed natural gas production is forecast to decline 2.6 percent to 58.7 bcf per day in 2010 and to increase by 1.3 percent in 2011.
Working natural gas rigs were at a low of 665 in mid-July last year and the agency expects that lower drilling activity will contribute to the 2010 production decline. The number of working natural gas rigs increased by about 100 in January and totaled 861 rigs at the end of that month, still about 25 percent below the year-ago level.
EIA said current futures market prices between $5.50 and $6.70 per million Btu “appear to provide the necessary economic incentive to expand drilling programs even further,” and as a result the agency expects monthly production to begin to increase slowly later this year and continue on an upward trend through the end of next year.
| 