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EIA expects 2013 Brent average of $108 Net oil imports projected to continue to fall, reaching 32% in 2013, lowest since 1985; China poised to become largest importer Kristen Nelson Petroleum News
The U.S. Energy Information Administration said in its March Short-Term Energy Outlook that it expects the Brent crude oil spot price to average $108 per barrel this year and $101 per barrel in 2014, down from an average of $112 per barrel in 2012, reflecting an increasing supply of liquid fuels from non-OPEC countries.
EIA said members of OPEC, the Organization of the Petroleum Exporting Countries, cut production heavily in the fourth quarter of 2012, contributing to a rise in crude oil prices at the start of 2013. This was particularly true of Saudi Arabia: the agency said estimates are that country’s production dropped by some 900,000 barrels per day between the third quarter of 2012 and February, from an average of 9.9 million bpd to 9 million bpd.
Non-OPEC production is projected to increase by 1.2 million bpd this year and by another 1.4 million bpd in 2014, EIA said, with North America accounting for almost three-quarters of the non-OPEC growth over the next two years “because of continued production growth from U.S. tight oil formations and Canadian oil sands.”
Rapid US growth projected EIA said it expects U.S. crude oil production to continue to grow rapidly over the next two years, from a 2012 average of 6.5 million bpd to 7.3 million bpd this year and 7.9 million bpd in 2014.
“Drilling in tight oil plays in the onshore Williston, Western Gulf, and Permian basins is expected to account for the bulk of forecast production growth over the next two years,” EIA said.
The agency is projecting Alaska production to decline from an average of 530,000 bpd last year to 500,000 bpd this year and 470,000 bpd in 2014. U.S. federal Gulf of Mexico production averaged some 1.3 million bpd last year, down some 50,000 bpd from 2011 and is expected to increase to an average of 1.4 million bpd this year and 1.5 million bpd in 2014, the agency said.
“Higher U.S. oil production means America will need less imported oil. After reaching a record 60 percent of domestic oil demand in 2005, net oil imports next year are forecast to fall to 32 percent of consumption, the lowest level since 1985,” EIA Administrator Adam Sieminski said in a March 12 statement.
He also said that with falling U.S. oil imports and rising Chinese demand, China is moving “closer to passing the United States as the largest global net oil importer. Net oil imports for the United States and China were on par at 6 million barrels per day in December 2012, according to the most recent trade data from EIA and China’s General Administration of Customs.”
Natural gas “U.S. natural gas production should level off from the growth seen in recent years, and natural gas consumption is expected to remain around 70 billion cubic feet per day for 2013 and 2014,” Sieminski said.
The agency noted that as natural gas production in the U.S. shifts inland, “well freeze-offs have become a greater supply disruption risk during the winter,” with a 3.5 percent decline between November and December in New Mexico the largest of any state or region, “as operators reported shut-ins resulting from freeze-offs,” with freeze-offs continuing to affect production in western U.S. states in January.
EIA said working gas stocks totaled 2.083 trillion cubic feet on March 1, 361 bcf less than at that time last year, but 269 bcf greater than the five-year (2008-12) average. EIA said it expects an end-of-March level of just under 2 tcf, less than the unusually high 2.477 tcf at the end of March last year, but well above the five-year average of 1.726 tcf.
Natural gas spot prices averaged $3.33 per million British thermal units at the Henry Hub in February, “relatively unchanged from the previous two months,” EIA said. The agency said it expects the Henry Hub price to increase from a 2012 average of $2.75 per million Btu to $3.41 per million Btu this year, and $3.63 per million Btu in 2014.
Economic assumptions Economic assumptions in the EIA’s energy price forecasts incorporate recent tax changes in the American Taxpayer Relief Act of 2012 and assume that spending cuts mandated in the Budget Control Act of 2011 will be replaced by a combination of income tax increases and spending cuts implemented in 2014. The assumptions also include an agreement to increase the debt ceiling in the near term, EIA said.
“Recent economic indicators suggest that growth may be picking up, particularly in the manufacturing sector,” the agency said.
A real GDP growth of 1.8 percent is assumed for the year, rising to 2.7 percent in 2014, with relatively slower growth in the beginning of the year following the expiration of the payroll tax cut.
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