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EIA forecasts $53 per barrel WTI in ‘09 Henry Hub spot price expected to average $4.24 per mcf this year, down from $9.13 in last year; rise to $5.80 in 2010 forecast Petroleum News
The U.S. Department of Energy’s Energy Information Administration is forecasting an average $53 per barrel price for West Texas Intermediate crude oil this year.
That compares, EIA said in its April 14 short-term forecast, to $100 per barrel in 2008 and a forecast of $63 a barrel for 2010.
The agency also expects U.S. consumption of natural gas to fall by nearly 2 percent this year, leading to lower natural gas prices. Industrial gas consumption is expected to decline by more than 7 percent due to a decline in industrial production during the economic downturn, while natural gas use in the electric power sector is expected to increase by almost 1 percent, as low natural gas prices back out some coal consumption in electric power generation.
The Henry Hub natural gas spot price is projected to average $4.24 per thousand cubic feet this year, down from $9.13 per mcf last year. An average price of $5.80 per mcf is projected for 2010, the agency said.
March crude prices up Despite high oil inventories in Organization for Economic Cooperation and Development countries, crude oil prices rose steadily in March, EIA said.
There are lower world petroleum supplies because of lower crude oil production by Organization of the Petroleum Exporting Countries, “substantially offsetting reduced oil demand caused by the global economic recession.”
EIA said timing and pace of the global economic recovery will determine whether the higher crude oil prices seen in March are sustainable.
World oil consumption is expected to drop by 1.35 million barrels per day in 2009 compared with 2008 levels, due to the global economic recession, with a 1.6 million bpd drop in OECD nations and an increase of 270,000 bpd in non-OECD nations.
U.S. increase expected
Crude oil production in the United States is expected to increase by 440,000 bpd in 2009 to an average of 5.4 million bpd.
“This would be the first increase in production since 1991,” EIA said. Output is expected to increase an additional 150,000 bpd next year. Two Gulf of Mexico platforms — Thunder Horse, already in production, and Tahiti, expected to begin production later this year — are contributing to the increase, the agency said.
U.S. crude oil production dropped 110,000 bpd last year, the agency said, primarily due to hurricane outages.
Natural gas rigs down by half U.S. marketed natural gas production is expected to decline by 0.3 percent in 2009 and by 1 percent in 2010, the agency said.
U.S. working natural gas rigs have declined from slightly more than 1,600 in late August 2008 to slightly fewer than 800 April 9, according to Baker Hughes.
“The precipitous drop in drilling activity and declining productivity of wells already in place are expected to cause production to steadily decline as the year progresses,” EIA said. Lower production in the non-Gulf of Mexico Lower 48 during the second half of this year is expected to more than offset higher year-over-year production in the first half of 2009, the agency said, adding that additional supply curtailments may be necessary as natural gas storage levels approach capacity this summer.
Marketed natural gas production from the federal Gulf of Mexico is expected to increase by 1.9 percent this year because of continued recovery from last year’s hurricane season and new supplies associated with startup of offshore oil production facilities.
The agency said that for 2010, despite expectations of higher prices and more drilling, total production is expected to be lower in both the Lower 48 and in the federal Gulf of Mexico.
LNG expected to rise U.S. imports of liquefied natural gas are expected to rise to some 480 billion cubic feet this year, up from 352 bcf in 2008, EIA said, attributing the rise in imports to lower global economic activity and the startup of new liquefaction capacity in the Middle East and other parts of the world.
“Depressed LNG demand in Asia and Europe should tend to increase the amount of LNG available to the United States,” the agency said, adding that its LNG projection “is subject to considerable uncertainty” because of slowed or delayed initial production from LNG facilities and lower U.S. natural gas demand growth this year.
“As a result, expanded LNG flows into the United States likely would depend on there being less domestic natural gas production or imports from Canada than forecast,” EIA said.
EIA is projecting Henry Hub natural gas spot prices to average $4.24 per mcf this year and $5.83 per mcf in 2010, but the agency said demand recovery coupled with the current drilling cutback and limited access to credit for producers “could lead to even higher prices if supply fails to keep pace with demand in the short-term. On the other hand, a larger-than-expected increase in LNG import volumes coupled with sustained economic weakness could keep prices depressed.”
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