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EIA boosts winter crude price estimate OPEC’s decision to maintain current quotas squeezes world supply Allen Baker Petroleum News Contributing Writer
With crude prices remaining strong in November, the Energy Information Administration has boosted its winter estimate by $1.75 per barrel compared with the figure just a month ago. November’s crude prices ranged from $29 to $33 a barrel for West Texas Intermediate, the agency reported.
The EIA now expects that crude to average $30.50 per barrel for the winter, and remain in the $28 to $30 range for all of next year.
That forecast is based on low inventories in the consuming countries, as well as the decision by the Organization of Petroleum Exporting Countries Dec. 4 to keep the current production quotas in place. The cartel plans to hold sales to 24.5 million barrels daily for the 10 OPEC members except Iraq.
OPEC ministers plan to meet again in early February and said after the December meeting they might even cut the quotas at that time.
World oil demand is expected to rise about 1.3 million barrels daily in 2003 and 2004, with next year’s growth expected to soak up all the added production outside the OPEC countries over the year. About half of the production increase is expected to come from Russia and the Caspian region.
The U.S. demand is expected to grow by 310,000 barrels per day on average for this year, a gain of 1.6 percent over the 2002 number. For 2004, demand would grow 300,000 barrels more, or 1.5 percent, to 20.4 million barrels each day under the scenario painted by the Energy Department economists. Natural gas to stay above $5 For natural gas, spot prices are expected to remain above $5 per million British thermal units for the next few months, unless temperatures are warmer than normal. High oil prices will help support the price of the competing fuel.
Natural gas prices were a bit lower in November than expected, but they spiked early in December as cold weather hit the East and storage levels declined. Storage is still above average for this time of year, however, and that could dampen any price increases.
Overall U.S. gas demand is expected to show a decline of 2.3 percent for this year, once all the numbers are in. Demand was down in the electric generating and industrial sectors due to high prices for the fuel. But with the economy rebounding, demand in 2004 is projected to rise by 1 percent.
Production for this year will show an increase of 2.4 percent, the economists figure, but that should fall back again in 2004 as drilling activity declines. The decline may not put too much pressure on prices because storage requirements are expected to be lower this coming summer.
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