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EIA: OPEC production has reduced upward pressure on crude oil prices With normal winter temperatures costs of home heating will increase 25% with natural gas, 40% with heating oil 19% with propane, 11% with electricity Petroleum News Alaska
OPEC oil production has risen more quickly over the past three or four months than projected, reducing upward pressure on oil prices, the U.S. Department of Energy’s Energy Information Administration said Nov. 8.
West Texas Intermediate crude oil spot prices averaged $28.84 in October, the EIA said in its November short-term energy outlook, about $6.70 a barrel above October 2001 spot prices, but “the WTI average price for fourth quarter 2002 is now projected to soften to $28.20, which is about $2 per barrel below our fourth-quarter projection from last month.” And OECD, Organization for Economic Cooperation and Development, inventory levels, now approaching five-year lows, should begin to rise as additional supplies begin to reach market, and be back in the middle of normal range by spring.
With lower crude oil prices, rises in home heating oil costs are expected to be less step than previously projected, the EIA said, but if the winter is about normal costs are still expected to be higher than last year’s. Costs of heating with natural gas are also expected to rise, the EIA said, with increases over last winter of 25 percent for natural gas, 40 percent for heating oil, 19 percent for propane and 13 percent for electricity.
Natural gas prices up While early cold weather in the Midwest and Northeast raised natural gas prices, gas storage levels are still well above 3 billion cubic feet and further large price increases are not expected in the near future, the EIA said.
If the rest of the winter has normal weather, winter natural gas wellhead prices are expected to average $3.44 per thousand cubic feet — $1.02 per thousand cubic feet above last winter’s price. The average natural gas wellhead price for all of 2002 is projected at $2.92 per Mcf compared to $4 per Mcf in 2001, but rising to $3.37 per Mcf for 2003.
Crude oil prices down The Organization of Petroleum Exporting Countries basket price has been more than $22 per barrel since March 8. The October average was $27.30.
Average prices of key crude oils were down slightly in October and by the end of October oil prices had fallen $3-$4 per barrel from September levels, the EIA said. OPEC continued production above quota levels and Iraqi exports began rising as hope for a diplomatic solution in the United Nation’s confrontation with Iraq eased tensions.
Alaska about 18 percent of 2003 U.S. production U.S. domestic oil production in 2002 is expected to increase by about 1 percent or 70,000 bpd, the EIA said, to some 5.87 million bpd. A 2 percent decrease expected in 2003.
Lower 48 oil production is expected to increase slightly to 4.87 million bpd in 2002, and then decrease by 130,000 bpd in 2003. Production from Shell’s Brutus platform in the Gulf of Mexico is expected to peak at 100,000 bpd this year, and oil production from outer continental shelf Gulf of Mexico fields Mars, Troika, Ursa, Dianna-Hoover and Brutus is expected to account for about 9.6 percent of Lower 48 production by the fourth quarter 2003.
The EIA said Alaska production is expected to account for about 18 percent of U.S. production in 2003. Alaska oil production is expected to increase by 4 percent in 2002 and increase again by 1 percent in 2003. The 2003 increase will be the result of field facilities expansion at Alpine, the EIA, said, “which will eventually add 60 to 70 thousand barrels per day.”
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