EIA forecasts higher oil prices

Petroleum News Alaska Staff

Higher than expected world crude oil prices have prompted the Energy Information Administration of the U.S. Department of Energy to project a higher cost of crude oil in the United States for the rest of 1999.

“We have slightly modified our near-term world oil price projections since our last forecast,” said EIA spokesman David Costello in a short-term energy outlook summary released May 6.

The average price U.S. refiners pay for imported crude oil was expected to rise in May as refiners gear up for the gasoline season, before showing a slight drop during the summer. The price is expected to end this year at about $15.50 per barrel.

EIA estimates world oil demand will grow by 1.1 million barrels per day in 1999, and another 1.65 million barrels per day in 2000. The forecast assumes Asian demand begins recovering this year and next.

EIA continues to forecast OPEC compliance with previous cuts to peak in the second quarter of 1999, followed by a gradual increase in OPEC production.

Non-OPEC production is expected to remain relatively flat in 1999 as historically low oil prices in 1998 delayed development of some oil projects.

The domestic crude oil production outlook has improved only slightly from April’s forecast. Average domestic oil production is expected to decrease by 370,000 barrels per day or 5.9 percent in 1999 to a level of 5.87 million barrels of oil per day.

Alaska oil production is expected to decrease by 7.6 percent in 1999 and again by 6.8 percent in 2000, a substantial portion coming from its Prudhoe Bay field. Other than routine maintenance, no major investments are planned for this field during the forecast period.

Oil production from recent discoveries such as Sambuca and Midnight Sun is expected to partially offset the decline in oil production from Prudhoe Bay and other North Slope fields in 1999. A large-scale enhanced oil recovery project was initiated in September 1996 in the Kuparuk River field, the second-largest producing field in the United States. The field’s production, and production from West Sak, Tabasco and Tarn, is expected to stay at an average of about 290,000 barrels per day in the forecast period.