|
EIA WTI forecast steady at $80 a barrel Energy Information Administration expects crude oil price to rise to $82 by end of the year, and to reach $85 by end of next year Petroleum News
Although daily price fluctuations continue, the Energy Information Administration’s forecast for the price of West Texas Intermediate crude oil has remained relatively stable over the last quarter, the agency said in its March 9 short-term forecast. EIA expects WTI prices to average above $80 per barrel this spring, rise to about $82 by the end of this year and to $85 by the end of 2011.
Projected economic growth for the year is higher in the March forecast, the agency said, with U.S. real gross domestic product growing 2.8 percent and world oil-consumption-weighted real GDP growing 3.4 percent, compared to the February forecast of 2.3 percent and 2.7 percent respectively.
EIA’s 2011 forecast for real GDP growth is relatively unchanged at 2.6 percent for the U.S. and 3.5 percent for the world.
Because of projected increases in crude oil prices, EIA is forecasting the annual average price of regular grade gasoline to increase from $2.35 per gallon in 2009 to $2.84 in 2010 and $2.96 in 2011.
“Average U.S. pump prices likely will exceed $3 per gallon at times during the forthcoming spring and summer driving season,” the agency said.
EIA said it expects the Henry Hub spot price for natural gas to average $5.17 per million Btu this year, up $1.22 from 2009. The price is expected to continue to rise in 2011, averaging $5.65 per million Btu.
Because of colder-than-normal weather in February, the projection for working gas inventories in the first quarter is about 1.55 trillion cubic feet compared to 1.644 tcf in EIA’s February projection. In February natural-gas-weighted heating degree days were nearly 11 percent above the 30-year norm.
Crude consumption up EIA said its more optimistic expectation for 2010 economic growth has driven its 2010 forecast for oil consumption growth up to 1.5 million barrels per day from 1.2 million in February.
It is this 2010 growth in oil consumption that “supports a firming of crude oil prices at above $80 per barrel this summer and accommodates a further drawdown of commercial oil inventories,” EIA said.
The agency said it has reduced its projections for surplus production capacity in the Organization of the Petroleum Exporting Countries, but “surplus capacity remains ample, dampening the likelihood of a large upward swing in prices.”
Most of the increased economic growth this year is expected to be in the Asia-Pacific and Middle East region, EIA said.
Non-OPEC supply increased by 590,000 bpd last year and EIA said this was “the largest annual increase since 2004.” The agency said its forecast assumes that OPEC will not change its target production levels at its mid-March meeting.
Gas consumption increasing U.S. natural gas consumption is expected to increase by 0.7 percent this year to 62.9 billion cubic feet per day and then decline by 0.4 percent in 2011, with cold weather driving this year’s natural gas consumption increases.
EIA said total natural-gas-weighted heating degree days in the first two months of 2010 were 5.5 percent above the 30-year normal level and the highest for the period since 2004. The small decline in natural gas use projected for 2011 reflects an expected return to near-normal weather.
Total U.S. marketed natural gas production is expected to decline by 2.7 percent to 58.7 bcf per day this year and increase by 1.1 percent in 2011, EIA said, with the number of working natural gas rigs increasing in response to higher prices in both the spot and forward markets.
EIA said Smith International reports that natural gas rigs have increased by more than 17 percent, or by nearly 140, since the beginning of 2010, with almost 570 working horizontal rigs, a new record.
The agency said it “still anticipates a decline in 2010 production because of the lag time arising from low drilling rates last year and steep decline rates associated with newly drilled wells.”
“However, continued recovery of drilling rig activity, increasing drilling efficiency, and the potential for higher production rates from shale gas wells could lead to higher-than-expected production this year and next.”
Gas imports expected to rise The agency expects U.S. net natural gas imports to be slightly higher in 2010 as declines in pipeline imports are offset by lower exports and higher liquefied natural gas imports.
On Feb. 26, working natural gas in storage was 1.737 tcf, 21 billion cubic feet above the previous five-year average and 71 bcf below the level during the corresponding week in 2009.
Inventories have been reduced by cold weather, with an estimated total inventory withdrawal in January and February of 1.406 tcf, compared to an average five-year withdrawal rate for those months of 1.159 tcf.
The Henry Hub spot price average of $5.32 per million Btu in February was 51 cents lower than January.
EIA said prices may strengthen slightly as local distribution companies begin to rebuild natural gas storage, but “the potential for higher domestic production, increasing LNG supply and limited consumption growth all reduce the possibility of sustained high prices as inventories are replenished over the next several months.”
| 