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EIA: 4th quarter $77 WTI, $82 in 2011 Agency projects 82,000-bpd reduction in US crude oil production in 2011 resulting from six-month deepwater drilling moratorium Petroleum News
The U.S. Department of Energy’s Energy Information Administration is now projecting that the West Texas Intermediate crude oil spot price will average $77 in the fourth quarter and $82 in 2011, slightly down from its August forecast.
EIA said it based projections in its Sept. 8 short-term energy outlook on forecasted U.S. real gross domestic product growth of 2.8 percent this year and 2.3 percent in 2011, down from an August forecast of 3.1 percent and 2.7 percent. The agency also lowered its world oil-consumption-weighted real GDP growth rate for 2011 to 3.3 percent from 3.6 percent.
The Henry Hub natural gas spot price is projected to average $4.54 per million British thermal units this year, a 60-cent increase from the 2009 average, but down 15 cents from the agency’s August forecast. EIA expects the Henry Hub spot price to average $4.76 per million Btu next year, down 22 cents from the August forecast.
World oil market view largely unchanged EIA said its view of the world oil market remains unchanged for the third month in a row.
“Despite a slight reduction in forecast global demand growth and the drop in world oil prices in recent weeks, the projected gradual reduction in global oil inventories over the forecast period should lend support to firming oil prices,” the agency said.
World oil consumption is projected to grow by 1.6 million barrels per day this year, with countries outside the Organization for Economic Cooperation and Development representing most of the expected growth, particularly China, the Middle East countries and Brazil.
For 2011, projected global oil consumption growth is 1.4 million bpd, down slightly from the August forecast due to lower GDP forecast growth.
Non-OPEC supply up in 2010 EIA is projecting non-OPEC crude oil supply to increase by 700,000 bpd this year with growth mainly from the United States, Brazil and the former Soviet Union, but is projecting it to fall by 160,000 bpd in 2011, “primarily because of declining total North Sea production and lower supply originating in the former Soviet Union, particularly Russia.”
The agency said this would be only the third time in the last 15 years that non-OPEC supplies failed to grow year-over-year, following non-OPEC production declines in 2005 and 2008 which EIA attributed primarily to supply disruptions in the Gulf of Mexico.
OPEC crude oil production is expected to rise slightly through 2011 to accommodate increasing world oil demand and maintain OPEC market objectives, EIA said, up 300,000 bpd this year and up 500,000 bpd in 2011.
The agency expects OPEC surplus capacity to remain near 5 million bpd compared to 4.3 million in 2009 and 1.5 million in 2008.
Liquid fuels consumption up Liquid fuels consumption in the U.S. is projected to grow by 160,000 bpd, 0.8 percent, this year, and by 130,000 bpd, 0.7 percent, next year, with all major petroleum products showing consumption growth, EIA said, reversing a 2006-09 trend of falling consumption.
U.S. liquid fuels consumption declined year-over-year by 40,000 bpd in the first quarter, but increased by 440,000 bpd year-over-year in the second quarter, the agency said.
Gasoline consumption is projected to grow by 0.3 percent this year and distillate consumption by 2 percent. EIA said that in 2011, gasoline consumption is projected to grow by 0.8 percent and distillate consumption by 0.7 percent. Jet fuel consumption is projected to grow at an average annual rate of about 0.7 percent through 2011.
Supply and imports U.S. crude oil production is expected to increase by 70,000 bpd in 2010, compared to an increase of 410,000 bpd in 2009.
EIA said forecast total domestic crude oil production rises by 10,000 bpd in 2011 to 5.44 million bpd, including a 120,000-bpd decline from the federal Gulf of Mexico and a 150,000-bpd increase in Lower 48 non-GOM production, and includes the agency’s projection that there will be an average reduction in crude oil output of about 82,000 bpd in 2011 resulting from the current six-month deepwater drilling moratorium.
Liquid fuel imports — crude oil and refined products combined — fell from 57 percent to 51 percent of U.S. consumption between 2008 and 2009, and are projected to average 50 percent of total consumption in 2010 and 2011.
Increase in natural gas consumption EIA said U.S. natural gas consumption is expected to increase 4 percent from 2009 levels to 65 billion cubic feet per day this year and remain relatively flat in 2011.
Power generation and industrial use accounted for the bulk of the projected consumption increase in 2010 compared to 2009.
In 2010, consumption of natural gas for electric power generation is projected to grow by nearly 1.3 bcf to 20.2 bcf, EIA said, surging because of a 23 percent increase in U.S. cooling degree days, resulting in an increase of 11 percent in natural gas consumption in the power generation sector over the last four months compared with the same period in 2009.
Natural gas consumption in the power sector is projected to fall by 0.4 bcf per day (2 percent) next year, because of an expected return to near-normal summer temperatures, the agency said.
Industrial sector natural gas use is also growing significantly, increasing by 6.4 percent from 16.8 bcf a day in 2009 to 17.9 bcf a day this year, but EIA said that growth is expected to slow to 1.2 percent in 2011 as the natural-gas-weighted industrial production index is projected to slow from 7 percent this year to 2.1 percent.
Natural gas production up this year Total marketed natural gas production is projected to increase by 1.2 bcf (2.1 percent) to 61.2 bcf per day this year, but to decline gradually next year, falling by 1.2 bcf a day (1.9 percent) as relatively low prices depress drilling activity.
EIA forecasts gross pipeline imports of 9.2 bcf per day this year, up 1.3 percent from 2009. Liquefied natural gas imports are forecast to average 1.25 bcf per day this year and 1.32 bcf per day in 2011.
“Low U.S. prices have discouraged imports, and ample domestic natural gas production has reduced the need for large quantities of LNG despite significantly higher consumption,” the agency said.
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