EIA expects oil to stay above $40
The Department of Energy’s Energy Information Administration said Sept. 8 that, even though OPEC is producing at its highest level since OPEC began tracking quotas in 1982, growing world oil demand is putting world oil surplus production “near its lowest point of the past three decades, providing an extremely limited cushion in the event of unexpected world oil market disruptions.”
The average West Texas Intermediate crude spot price for August was $44.90 per barrel, about $3 above the average it projected for August, EIA said, and its “baseline WTI price projections have been raised slightly in the near term so that a monthly average price below $40 per barrel is not expected until about midway through 2005.”
Petroleum inventories in the industrialized world remain below level, “particularly when viewed in the context of rapidly increasing oil demand,” EIA said.
EIA said it has revised its world demand growth for 2004 upwards to 2.4 million barrels per day, up 3.2 percent over 2003, with a revision to Chinese demand growth accounting for 300,000 of the 400,000 bpd increase since its projection in August. Demand growth is expected to slow to 2.4 percent in 2005, “in part due to the impact of high oil prices on world economic growth.” Moderate growth in gas prices The average August spot price for natural gas at the Henry Hub was $5.56 per thousand cubic feet, about 7 percent below what EIA projected, based on below normal cooling demand levels and peak power demand.
Because of lower prices and relatively weak demand, there were high rates of storage injection of natural gas, 9 percent above the five-year average by month-end. The agency said high rates of drilling in North America and modest increases in liquefied natural gas imports, combined with “robust storage levels” are expected to produce “moderate improvement” in gas supplies through 2005, producing only a modest increase in spot prices. Henry Hub prices averaged $5.80 per mcf in 2003, EIA said, and are expected to average $5.96 per mcf in 2004 and $6.14 per mcf in 2005.
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