|
EIA expects Brent to continue to weaken Spot prices down on restart of some crude production in Libya, moderated concerns over conflict in Syria; WTI also projected down Kristen Nelson Petroleum News
Brent crude oil spot prices are down from a recent September peak, the U.S. Energy Information Administration said in its September short-term energy outlook.
Brent crude oil spot prices peaked at $117 per barrel early in September, the EIA said Oct. 8, but were at $108 per barrel at the end of the month “as some crude oil production restarted in Libya and concerns over the conflict in Syria moderated.”
The agency said it expects the Brent crude price to continue to weaken, averaging $107 per barrel in the fourth quarter of the year and dropping to $102 per barrel in 2014, a continued weakening based on the growth of non-OPEC supplies.
West Texas Intermediate crude oil prices are projected to average $101 per barrel in the fourth quarter and $96 per barrel next year. The discount of WTI to Brent, which averaged $18 in 2012 and dropped to $3 per barrel this July, averaged $5 in September; EIA said it expects that discount to average $6 per barrel in the fourth quarter and next year.
Non-OPEC supply growth Liquid fuels production from non-Organization of the Petroleum Exporting Countries is projected to increase by 1.5 million barrels per day in 2013 and 2014, EIA said. That production contributes to a decline in call on OPEC crude oil and global stocks, the agency said, projected to fall from an average of 30.2 million bpd this year to 29.6 million bpd in 2014.
North America is the largest source of non-OPEC supply growth, with production projected to increase by 1.4 million bpd this year and by 1.1 million bpd in 2014, “resulting from continued production growth in U.S. onshore tight oil formations and from Canadian oil sands.”
With U.S. crude oil production expected to rise from an average of 6.5 million bpd in 2012 to 7.5 million bpd this year and 8.5 million bpd in 2014, U.S. liquid fuel net imports are expected to continue to decline to an average of 5.3 million bpd in 2014. The net import share of U.S. consumption — which peaked at more than 60 percent in 2005 — is projected to fall to 28 percent next year, the lowest level since 1985, the agency said.
EIA said it is looking for smaller rates of production growth from Central and South America, Asia and Oceania and Africa.
Kazakhstan’s Kashagan oil field, the largest to be discovered in the past 35 years, is expected to begin commercial production in October. EIA said “significant potential, technical challenges and high development costs may limit its expansion,” and the agency expects output to reach only 25,000 bpd by the end of the year.
OPEC production to decline EIA said it projects OPEC liquid fuels production to decline by 800,000 bpd this year and by an additional 300,000 bpd in 2014.
“The declines in 2013 mostly reflect supply outages among some OPEC producers, along with an overall decrease in Saudi Arabia’s production in response to the increase in non-OPEC supply,” the agency said.
In the first quarter of 2013 Saudi Arabia’s crude oil production averaged 830,000 bpd lower than in the same period of 2012, but rose from 9.1 million bpd in March to 10.2 million bpd in August, “in part to offset recent global supply disruptions,” EIA said. The agency said it expects Saudi Arabia and other OPEC members to cut back production as disrupted production comes back online and non-OPEC supply continues to grow.
Unplanned disruptions included widespread protests at key oil installations in Libya. Planned maintenance at Iraq’s southern oil terminals resulted in an export decrease of some 450,000 bpd.
Total OPEC surplus crude oil production capacity averaged 1.7 million bpd in the third quarter, 300,000 bpd below the year-ago average and 1.4 million bpd below the historical 2010-12 average.
EIA expects surplus OPEC capacity to increase to an average of 2.4 million in the fourth quarter.
Natural gas EIA said Henry Hub natural gas spot prices averaged $3.61 per million British thermal units in September, up 19 cents from August. The agency said prices declined from April through August, but began increasing in September in anticipation of the winter heating demand.
The Henry Hub price averaged $2.75 per million Btu in 2012 and the EIA is forecasting a $3.71 per million Btu average this year, rising to $4 per million Btu next year.
The agency said it expects that domestic natural gas consumption, which averaged 69.7 billion cubic feet per day last year, will average 70 bcf per day this year and 69.4 bcf per day in 2014.
EIA said colder winter temperatures are expected in 2013 and 2014, compared to record warm temperatures in 2012, and those colder temperatures are expected to increase the amount of natural gas used for residential and commercial heating.
But the year-over-year price increase is expected to contribute to declines in natural gas used for electric power generation, from 25 bcf per day last year to 22.1 bcf this year and 21.6 bcf in 2014.
Natural gas marketed production is projected to increase from 69.2 bcf per day in 2012 to 70 bcf this year and 70.4 bcf in 2014.
| 