WASHINGTON (MNI) – The following is the first part of excerpts from
the Energy Information Administration’s April Short-Term Energy
Outlook published Tuesday:
Crude Oil and Liquid Fuels Overview.
The forecast for total world oil consumption grows by an annual
average of 1.5 million bbl/d in 2011 and 2012. Supply from non-OPEC
countries grows an average of about 0.4 million bbl/d annually through
2012. Consequently, EIA expects that in order to meet projected demand
growth the market will rely on both a drawdown of inventories and
significant increases in the production of crude oil and non-crude
liquids in OPEC member countries at a time when the disruption of crude
oil exports from Libya and continuing unrest in other MENA countries
already highlight significant supply risks.
Among the major uncertainties that could push oil prices above or
below our current forecast are: the continued unrest in producing
countries and its potential impact on supply; decisions by key OPEC
member countries regarding their production response to the global
increase in oil demand; the rate of economic growth, both domestically
and globally; fiscal issues facing national and sub-national
governments; and China’s efforts to address concerns regarding its
growth and inflation rates.
Global Crude Oil and Liquid Fuels Consumption.
World crude oil and liquid fuels consumption grew by an estimated
2.3 million bbl/d in 2010 to a record-high level of 86.7 million bbl/d.
EIA expects that world liquid fuels consumption will grow by 1.5 million
bbl/d in 2011 and by an additional 1.6 million bbl/d in 2012. Countries
outside the Organization for Economic Cooperation and Development (OECD)
will make up almost all of the growth in consumption over the next two
years, with the largest increases coming from China, Brazil, and the
Middle East. EIA expects that, among the OECD regions, only North
America will show growth in oil consumption over the next two years,
offsetting declines in OECD Europe and Japan.
EIA projects that non-OPEC crude oil and liquid fuels production
will increase by 550,000 bbl/d in 2011, and 230,000 bbl/d in 2012. The
greatest increases in non-OPEC oil production during 2011 occur in
China, Brazil, and in countries that were formerly part of the Soviet
Union where EIA expects annual average production growth of 140,000
bbl/d, 170,000 bbl/d, and 270,000 bbl/d, respectively. In 2012, EIA
expects Canadian production to grow by 180,000 bbl/d while China and
Brazil grow by 140,000 and 110,000 bbl/d, respectively. Other non-OPEC
areas are expected to decline, including a decrease in North Sea
production of 110,000 bbl/d in 2011 and a further 230,000 bbl/d in
2012. Projected U.S. crude oil and liquid fuels production is flat in
2011 and then falls by 130,000 bbl/d in 2012.
Forecast OPEC crude oil production increases by only 0.1 million
bbl/d in 2011, followed by a significantly larger 1.1 million bbl/d
increase in 2012. EIA assumes that about one-half of Libya’s production
will resume by the end of 2012. EIA has revised its projected OPEC
surplus capacity downward, compared with the last Outlook. EIA projects
that OPEC surplus capacity will fall from 4.2 million bbl/d at the end
of 2010 to 3.4 million bbl/d at the end of 2011, followed by a further
decline to 2.7 million bbl/d by the end of 2012. Forecast OPEC non-crude
liquids production increases by 0.7 million bbl/d in 2011 and by 0.3
million bbl/d in 2012.
OECD Petroleum Inventories.
EIA expects that OECD onshore inventories will decline from the
elevated levels of 2010 following the steep drop in floating storage
that has already occurred. Projected on-shore OECD stocks fall by about
78 million barrels in 2011, followed by an additional 43 million barrel
decline in 2012. Days of supply (total inventories divided by average
daily consumption) drops from a relatively high 58 days during the
fourth quarter 2010 to 55.8 days in the last quarter of 2011. EIA
expects that the continued increase in consumption and decline in
inventories in 2012 will leave inventories at 54.6 days of supply at the
end of that year.
Crude Oil Prices.
WTI crude oil spot prices averaged $89 per barrel in February then
rose to $108 per barrel by the end of March. Projected WTI prices
average $106 in 2011 and $114 per barrel in 2012, increases of $5 per
barrel and $9 per barrel, respectively, from last month’s Outlook.
Growing volumes of Canadian crude oil imported into the United States
contributed to record-high storage levels at Cushing, Oklahoma, and a
price discount for WTI compared with similar quality world crudes such
as Brent. Consequently, the projected U.S. refiner average acquisition
cost of crude oil, which was about $2.50 per barrel below WTI in 2009
and 2010, is $2.20 per barrel above WTI in 2011 and $0.25 per barrel
above WTI in 2012.
All energy price forecasts are highly uncertain. WTI futures for
June 2011 delivery over the 5-day period ending April 7 averaged $109
per barrel and implied volatility averaged 30 percent, establishing the
lower and upper limits of a 95-percent confidence interval for the
market’s expectations of monthly average WTI prices in that month of $90
per barrel and $132 per barrel, respectively. Last year at this time,
WTI for June 2010 delivery averaged $83 per barrel with the limits of
the 95-percent confidence interval at $68 per barrel and $101 per
barrel. Based on WTI futures and options prices, the probability that
the monthly average price of WTI crude oil will exceed $120 per barrel
in December 2011 is about 32 percent. Conversely, the probability that
the monthly average December 2011 WTI price will fall below $100 per
barrel is about 38 percent.
U.S. Crude Oil and Liquid Fuels
U.S. Liquid Fuels Consumption.
Total consumption of petroleum and non-petroleum liquid fuels
increased by 380,000 bbl/d (2.0 percent) to 19.1 million bbl/d in 2010.
Projected total U.S. liquid fuels consumption increases by 210,000 bbl/d
(1.1 percent) in 2011, and by a further 160,000 bbl/d (0.9 percent), to
19.5 million bbl/d, in 2012. Transportation fuels (motor gasoline
distillate fuel, and jet fuel) account for about 75 percent of the
growth in total consumption in 2011 and almost all of the growth in
U.S. Liquid Fuels Supply and Imports.
Domestic crude oil production, which increased by 150,000 bbl/d in
2010 to 5.51 million bbl/d, declines by 30,000 bbl/d in 2011 and by a
further 120,000 bbl/d in 2012. The forecast includes Alaska production
declines of 60,000 bbl/d in 2011 and 10,000 bbl/d in 2012. EIA expects
production from the Federal Gulf of Mexico (GOM) to fall by 190,000
bbl/d in both 2011 and 2012. The forecast production declines in Alaska
and the GOM are partially offset by projected increases in lower-48
non-GOM production of 220,000 bbl/d in 2011 and 70,000 bbl/d in 2012.
Liquid fuel net imports, including both crude oil and refined
products, fell from 57 percent of total U.S. consumption in 2008 to 49
percent in 2010, primarily because of the decline in consumption during
the recession and rising domestic production. EIA forecasts that liquid
fuel net imports will average 9.5 million bbl/d in 2011 and 9.9 million
bbl/d in 2012, comprising 49 percent and 51 percent of total
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