EIA raises year-end oil price forecast

Petroleum News Alaska Staff

The U.S. Department of Energy’s Energy Information Administration said Sept. 6 that it is now projecting a year-end crude oil price $2-$3 a barrel higher than previous projections.

“Thus,” the EIA said in its September short-term outlook, “we think that the probability of West Texas Intermediate costing an average of $30 per barrel or more at midwinter is about 50 percent.”

The agency cited tightened supply conditions for international and domestic energy and said prices for the first quarter of 2001 seem likely to “match or exceed the high level seen in Q1 2000.”

Tight oil markets this year and an inherent propensity for high gas utilization in incremental power supply have resulted in rising North American natural gas prices, the EIA said, noting that the impact in North America has been exacerbated by declining or stagnant natural gas production over the last few years.

Average natural gas wellhead prices this coming winter are likely to be nearly double the level seen last year, a development that would generate an average increase in the unit cost of gas delivered to residential consumers of about 25 percent.

The agency said a break in the current general strength of fuel prices could come if winter weather is mild, but if there are normal winter temperatures, the combination of higher expected consumption and higher prices would be expected to yield average increases in heating fuel expenditures of 20 to 40 percent this heating season, depending on the heating fuel used.