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EIA expects tight oil markets through rest of year, $30-plus prices
The U.S. Department of Energy's Energy Information Administration said Feb. 7 that it expects world oil markets to remain tight through most of 2003 as petroleum inventories and global spare production capacity continue to dwindle amid blasts of cold weather and constrained output from Venezuela.
The EIA said in its monthly short-term forecast that efforts by the Organization of Petroleum Exporting Countries to increase output to make up for lower Venezuela output has reduced global spare production capacity to only 2 million barrels per day. That leaves little room, the agency said, to make up for unexpected supply or demand surprises.
The average West Texas Intermediate crude oil price increased by $3.50 to $33 per barrel from December to January. For the year 2003, WTI oil prices are expected to remain above $30 per barrel, the EIA said, even though Venezuelan output appears to be moving toward normal sooner than expected.
And the uncertainty surrounding Iraq is also likely to render markets abnormally volatile, at least for the near-term.
Henry Hub spikes above $6 The spot price of natural gas at the Henry Hub rose above $6 per million Btu on Jan. 23 and Feb. 4 of this year, the EIA said, and spot prices have been above the $5 per million Btu level on most trading days this year, as underground storage has been significantly reduced compared to the levels of one year ago.
Considering not only the reduced cushion of natural gas in storage but also currently high world oil prices, the EIA said, natural gas prices will likely remain relatively high through February and possibly March unless a prolonged warm spell occurs over the next several weeks.
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