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High energy prices likely to persist well into 2004, EIA says
Allen Baker Petroleum News Contributing Writer
World oil prices should remain near $30 per barrel for the next few months, slipping only to about the $27 level (for West Texas Intermediate) by late in 2004, according to the federal Energy Information Administration. The EIA’s October outlook says that the decision by the Organization of Petroleum Exporting Countries to reduce production targets “reduces the chances for a large end-of-year stockbuild that OPEC feared could undermine oil prices.” For natural gas, the potential for sharply higher winter prices has eased as gas in underground storage is now within the five-year average level.
High prices cut gas demand That occurred due to high prices that cut demand levels over the summer, particularly in the industrial and electrical power sectors. The price of natural gas for all of 2003 is expected to average about $4.90 per thousand cubic feet, an increase of $2 per mcf over the 2002 level. That’s the largest annual wellhead price increase on record. While U.S. crude oil demand is expected to rise by about 170,000 barrels a day, or 0.98 percent, for all of 2003, natural gas usage is expected to decline by 1.1 percent to 22.40 trillion cubic feet for all of this year. For 2004, U.S. oil demand is projected to grow an additional 420,000 barrels daily, or 2.1 percent, to 20.35 million barrels. Demand for natural gas is expected to rebound a bit in 2004 to 22.40 tcf on an annual basis, as increased drilling cuts the price of the fuel. The EIA’s estimate for the average 2004 wellhead price is $3.97 per mcf, about 90 cents lower than the 2003 figure. “The prospects for significant reductions in natural gas wellhead prices … hinge on the productivity of the increased drilling in terms of expected output,” the EIA says.Domestic oil flow declining Average crude production domestically is projected to be essentially flat this year, followed by a decline of 78 thousand barrels a day, or 1.4 percent, in 2004. The EIA figures Lower 48 production will slide by 3,000 barrels a day this year and by 46,000 barrels daily in 2004. For Alaska, the production decline this year is projected to be 0.6 percent, followed by a decline of 3.2 percent in 2004.
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