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August crude prices up for fourth month EIA forecasts $109 per barrel for Brent in 2nd half of year, 4th quarter average of $101 per barrel for West Texas Intermediate Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Sept. 10 in its short-term forecast that average monthly crude oil prices increased in August for the fourth consecutive month, citing increased supply disruptions in Libya and intensified concerns over the conflict in Syria.
The Brent spot price, which averaged $108 per barrel in the first half of the year, is now forecast to average $109 per barrel in the second half of 2013 and $102 per barrel in 2014, EIA said, up $5 and $2 respectively from the agency’s August forecast.
EIA is projecting a West Texas Intermediate crude oil price averaging $101 in the fourth quarter and $96 per barrel in 2014.
The agency said unplanned disruptions among the Organization of the Petroleum Exporting Countries and non-OPEC producers reached an estimated 2.7 million barrels per day in August, the highest level since at least January 2011. Of that total 600,000 bpd were attributable to non-OPEC producers and 2.1 million bpd to OPEC producers. “OPEC disruptions reached the highest level since at least January 2009, when EIA began tracking this information.”
Domestic crude oil production averaged 7.6 million bpd in August, “the highest monthly level of production since 1989,” the agency said. It is forecasting U.S. total crude oil production to average 7.5 million bpd this year and 8.4 million bpd in 2014, increases of 100,000 and 200,000 bpd, respectively, from the August forecast.
Tighter world oil market The increase in unplanned liquid fuels production disruptions in August, combined with peak summer demand “and exacerbated by rising concerns over the conflict in Syria and its regional implications, contributed to a tighter world oil market during the month,” EIA said.
Global consumption is projected to grow by 1.1 million bpd this year and by another 1.2 million bpd in 2014, led by growth in China, the Middle East, Central and South America. Countries outside the Organization for Economic Cooperation and Development, OECD, are expected to account for “essentially all consumption growth,” the agency said. It is projecting OECD liquid fuels consumption to decline by 200,000 bpd both this year and next, with those declines “largely due to lower consumption in Europe and Japan.”
US supply growth EIA is forecasting non-OPEC liquid fuels production to increase by 1.6 million bpd this year and by 1.4 million bpd in 2014, with the largest non-OPEC area of growth North America, with production increases of 1.4 million bpd this year and 1.1 million bpd in 2014, “resulting from continued production growth in U.S. onshore tight oil formations and from Canadian oil sands.”
OPEC liquid fuels production is projected to decline by 800,000 bpd this year and by 200,000 bpd in 2014, reflecting “unplanned outages of crude oil production among some OPEC producers as well as decreases in Saudi Arabia production in response to the increase in non-OPEC supply,” EIA said.
U.S. oil production is projected to continue to grow, from 6.5 million bpd in 2012, to a forecast 7.5 million bpd this year and 8.4 million bpd in 2014, with the bulk of the increase coming from “continued focus on drilling in tight oil plays in the onshore Williston, Western Gulf and Permian basins” accounting for the bulk of production growth. Offshore Gulf of Mexico production is forecast to average 1.3 million bpd this year and 1.4 million bpd in 2014.
U.S. total liquid fuel net imports, including crude oil and petroleum products, reached 12.5 million bpd in 2005 and have been falling since, to 7.4 million bpd in 2012 and an expected average of 5.4 million bpd by 2014. EIA said the share of U.S. consumption met by liquid fuel net imports peaked at more than 60 percent in 2005 and fell to an average of 40 percent in 2012, with the share of net imports expected to decline to 29 percent in 2014, “which would be the lowest level since 1985.”
Domestic natural gas marketed production is projected to increase from 69.2 billion cubic feet per day in 2012 to 69.9 bcf per day this year and 70.4 bcf per day next year, with onshore production increasing while federal Gulf of Mexico production from existing fields declines.
EIA said natural gas pipeline gross imports, which have fallen over the last 5 years, are projected to fall by 0.2 bcf per day this year and to remain at near 2013 levels in 2014, with LNG imports at minimal levels of 0.4 bcf in both 2013 and 2014.
Natural gas spot prices averaged $3.43 per million Btu at Henry Hub in August, down 20 cents from July, but EIA said it expects prices to begin to increase in September as temperatures drop and natural gas demand grows for space heating. It is projecting the Henry Hub spot price to increase from an average of $2.75 per million Btu in 2012 to $3.68 this year and $3.91 in 2014.
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