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EIA lowers growth assumptions, forecast Agency now expects GDP growth of only 1.5% this year; has reduced average refiner cost estimate to $103 per barrel, down from $107 Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Sept. 7 that it has lowered its economic growth assumptions “substantially” from August and as a result has lowered its U.S. average refiner cost forecast to $103 per barrel next year, compared to its July forecast of $107 per barrel.
In July EIA expected 2.4 percent U.S. real gross domestic product growth this year and 2.6 percent next year. Its current forecast assumes that GDP growth this year will be only 1.5 percent, with 1.9 percent growth in 2012.
EIA has been using average refiner cost recently because West Texas Intermediate, typically cited as the benchmark U.S. crude price, is discounted relative to other U.S. and world crude oils and that discount “is expected to continue until transportation bottlenecks restricting the movement of crude oil out of the mid-continent region are relieved,” the agency said.
The Henry Hub natural gas spot price is projected to average $4.20 per million British thermal units this year, 18 cents below last year, and EIA said it expects moderate tightening in the natural gas market next year, with an increase in the Henry Hub spot price to $4.30 per million Btu.
Less optimistic on demand EIA said it is less optimistic this month than last about global economic growth and has revised oil demand growth down, relieving “some of the potential oil market tightness that had been implied by previous forecast balances.”
The agency cited various shocks to oil supply and demand this year as contributing to uncertainty in the revised price forecast, and said upside risks to oil price remain, “particularly due to ongoing unrest in oil-producing regions and the possibility that non-OECD demand will be more resilient than expected. Yet downside risks arguably predominate, as fears persist about the rate of global economic recovery, contagion effects of the debt crisis in the European Union, and other fiscal issues facing national and sub-national governments.”
Non-OPEC, OPEC supply Supply from outside the Organization of the Petroleum Exporting Countries is projected to grow by 500,000 barrels per day this year and 770,000 bpd in 2012, to a 2012 average of 53.1 million bpd, EIA said, with the largest expected growth coming from Brazil, Canada, China, Colombia, Kazakhstan and the United States. Non-OPEC supply is expected to decline in Russia and the North Sea.
OPEC crude oil production is expected to decline by some 360,000 bpd this year, largely due to supply disruption from Libya. EIA said it expects only about half of Libya’s pre-civil war production to resume next year, but said the resumption of at least some Libyan production would contribute to an overall increase in OPEC production next year of some 510,000 bpd.
Crude oil prices, US production WTI crude oil spot prices fell from an average of $97 per barrel in July to $86 per barrel in August, and EIA said it has revised projected oil price paths downward from July.
The agency said it now expects the U.S. refiner average crude oil acquisition cost to average $100 per barrel this year and $103 per barrel in 2012, compared with $100 per barrel and $107 per barrel for this year and next in its July forecast.
EIA said domestic crude oil production was up 110,000 bpd last year to 5.5 million bpd and is expected to increase by a further 140,000 bpd this year and 60,000 bpd next year, “driven by increased oil-directed drilling, particularly in unconventional shale formations.”
U.S. liquid fuel net imports (crude oil and refined products) fell from 57 percent to total U.S. production in 2008 to 49 percent last year due to rising production and consumption decline during the economic downturn, and EIA said it is forecasting that net imports’ share of total consumption will decline further to 47 percent both this year and next.
Natural gas EIA said it expects total natural gas consumption will grow 1.8 percent this year to 67.3 billion cubic feet per day, with growth in the industrial and electric power sectors accounting for most of the growth in total consumption, with consumption expected to grow 0.6 percent next year to 67.7 bcf per day.
Marketed natural gas production is expected to average 65.8 bcf per day this year, a 4 bcf per day increase over 2010, with the majority of growth from onshore Lower 48 production, more than offsetting steep projected declines in federal Gulf of Mexico production.
The Henry Hub spot price averaged $4.05 per million Btu in August, 37 cents lower than the July average.
EIA said its August forecast lowers this year’s forecast by 4 cents to $4.20 per million Btu and lowers the 2012 forecast by 11 cents to $4.30, with the increase reflecting “some tightening in supply as production growth slows in 2012.”
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