U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Global Petroleum and Other Liquids
EIA estimates that global oil inventories increased by almost 0.8 million bbl/d in 2014, the largest build since 2008, when falling demand for oil caused prices to drop sharply during the second half of the year. However, unlike in 2008, the current market imbalance has been predominantly supply-driven, as production from countries outside of the Organization of the Petroleum Exporting Countries (OPEC) grew by a record high of 2.0 million bbl/d in 2014. Global oil inventories are expected to continue to grow by 0.9 million bbl/d during the first half of 2015, but to taper off by the end of the year as non-OPEC supply growth, particularly from the United States, weakens because of lower oil prices.
EIA estimates that commercial oil inventories held by countries in the Organization for Economic Cooperation and Development (OECD) grew by a record 158 million barrels in 2014, after ending 2013 at the lowest end-of-year level since 2003. EIA expects OECD commercial inventories to grow by 68 million barrels in 2015 and to stay relatively flat in 2016. Throughout 2015 and 2016, OECD commercial inventories are expected to be above the previous five-year (2010-14) range.
Global Petroleum and Other Liquids Consumption
EIA estimates that global consumption grew by 0.9 million bbl/d in 2014, averaging 91.4 million bbl/d for the year. EIA expects global consumption to grow by 1.0 million bbl/d in both 2015 and 2016. Projected global oil-consumption-weighted real gross domestic product (GDP), which increased by an estimated 2.7% in 2014, is projected to grow by 2.9% in 2015 and by 3.2% in 2016.
Non-OECD consumption, which grew by 1.2 million bbl/d in 2014, is projected to grow by 0.9 million bbl/d in 2015 and 1.1 million bbl/d in 2016. The biggest reduction in forecast non-OECD consumption growth in 2015 comes from a 0.2-million-bbl/d decline in Russia's consumption because of its economic downturn. Russia's consumption is expected to decline by a similar amount in 2016. China is the leading contributor to projected global consumption growth, with consumption expected to increase by an annual average of 0.3 million bbl/d over the next two years.
OECD consumption, which fell by 0.3 million bbl/d in 2014, is expected to grow by 0.1 million bbl/d in 2015 and remain relatively flat in 2016. Japan and Europe accounted for almost the entire decline in 2014 and are expected to continue to decline over the next two years, albeit at a lesser rate than in 2014. The United States is the leading contributor to projected OECD consumption growth, with U.S. consumption increasing by 0.3 million bbl/d in 2015 and 0.1 million bbl/d in 2016.
Non-OPEC Petroleum and Other Liquids Supply
EIA estimates that non-OPEC production grew by 2.0 million bbl/d in 2014, averaging 56.2 million bbl/d for the year. Non-OPEC supply growth is expected to slow over the next two years mostly because of lower projected oil prices. Non-OPEC production grows by 0.7 million bbl/d in 2015 and 0.5 million bbl/d in 2016, with the United States as the leading contributor. The slower growth in total non-OPEC supply is largely attributable to slower production growth in the United States, Canada, and Central and South America. Additionally, production in Europe and Eurasia is projected to decline.
Unplanned supply disruptions among non-OPEC producers averaged slightly less than 0.6 million bbl/d in December 2014, unchanged from the previous month. EIA estimates that unplanned non-OPEC supply disruptions averaged slightly more than 0.6 million bbl/d in 2014, 0.2 million bbl/d less than the previous year. South Sudan, Syria, and Yemen accounted for more than 80% of total non-OPEC supply disruptions in 2014.
OPEC Petroleum and Other Liquids Supply
EIA estimates that OPEC crude oil production averaged 29.9 million bbl/d in 2014, a slight decline from the previous year. Crude oil production declines in Libya, Angola, Algeria, and Kuwait more than offset production growth in Iraq and Iran. EIA expects OPEC crude oil production to remain flat in 2015 and fall by 0.3 million bbl/d in 2016. Iraq is OPEC's largest contributor of growth over the next two years, but its growth is expected to be offset by production declines from other Persian Gulf producers. However, the threat of the Islamic State of Iraq and the Levant (ISIL) on northern Iraqi production and exports still looms, and as a result, Iraq is a major wild card in the world oil production forecast.
EIA estimates that OPEC produced 6.1 million bbl/d of noncrude oil liquids in 2014, close to production in 2013. OPEC noncrude liquids production is expected to increase by almost 0.1 million bbl/d in 2015 and 0.3 million bbl/d in 2016, led by Iran and Qatar.
Unplanned crude oil supply disruptions among OPEC producers averaged 2.8 million bbl/d in December 2014, an increase of 0.1 million bbl/d compared with the previous month because of new production outages in Libya. Unplanned OPEC crude supply disruptions averaged 2.5 million bbl/d in 2014, 0.6 million bbl/d higher than the previous year. Libya and Iraq accounted for almost all of the growth in OPEC disruptions. The high level of OPEC disruptions contributed to higher crude oil prices during the first half of 2014. However, with continuous growth in non-OPEC production, continued strong production in Saudi Arabia, and relatively flat world demand growth, the current volume of supply disruptions has become less significant. Unplanned supply disruptions could still affect crude oil prices, but the threshold that the market can bear has risen in light of robust global production.
EIA expects OPEC surplus crude oil production capacity, which is concentrated in Saudi Arabia, to increase to 2.3 million bbl/d in 2015 and 2.7 million bbl/d in 2016, after averaging about 2.1 million bbl/d in 2014. Surplus capacity is typically an indication of market conditions, and surplus capacity below 2.5 million bbl/d is an indicator of a relatively tight market. However, the current and forecast levels of global inventory builds make the projected low surplus capacity level in 2015 less significant.
OECD Commercial Petroleum Inventories
EIA estimates that OECD commercial oil inventories totaled 2.71 billion barrels at the end of 2014, equivalent to roughly 57 days of consumption, and the highest end-of- year level on record. Projected OECD oil inventories rise to 2.78 billion barrels at the end of 2015 and 2.79 billion barrels at the end of 2016.
Crude Oil Prices
North Sea Brent crude oil spot prices averaged $62/bbl in December, the lowest monthly average Brent price since May 2009, down $17/bbl from the November average. The combination of robust world crude oil supply growth and weak global demand has contributed to rising global inventories and falling crude oil prices (EIA, This Week in Petroleum, November 13, 2014).
EIA expects global oil inventories to continue to build in 2015, keeping downward pressure on oil prices. The forecast Brent crude oil price averages $58/bbl in 2015, $11/bbl lower than projected in last month's STEO. Based on current market balances, EIA expects downward price pressures to be concentrated in the first half of 2015 when global inventory builds are expected to be particularly strong. EIA projects that Brent prices will reach a 2015 monthly average low of $49/bbl in January and February, and then increase through the remainder of the year to average $67/bbl during the fourth quarter.
The monthly average WTI crude oil spot price fell from an average of $76/bbl in November to $59/bbl in December. Like Brent crude oil prices, WTI prices have decreased considerably, with monthly average prices falling by more than 44% as of December after reaching their 2014 peak of $106/bbl in June. EIA now expects WTI crude oil prices to average $55/bbl in 2015, $8/bbl lower than in last month's STEO, and $71/bbl in 2016. The discount of WTI to Brent crude oil is forecast to widen slightly from current levels later in the forecast, averaging $3/bbl in 2015 and $4/bbl in 2016.
However, the current values of futures and options contracts suggest high uncertainty in the price outlook (Market Prices and Uncertainty Report). WTI futures contracts for April 2015 delivery, traded during the five-day period ending January 8, averaged $51/bbl. Implied volatility averaged 48%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in April 2015 at $34/bbl and $76/bbl, respectively. The 95% confidence interval for market expectations widens considerably over time, with lower and upper limits of $28/bbl and $112/bbl for prices in December 2015. Last year at this time, WTI for April 2014 delivery averaged $98/bbl, and implied volatility averaged 16%. The corresponding lower and upper limits of the 95% confidence interval were $86/bbl and $113/bbl.
The recent declines in oil prices and associated increase in oil price volatility continue to contribute to a particularly uncertain forecasting environment, and several factors could cause oil prices to deviate significantly from current projections. Among these factors is the responsiveness of supply to lower prices. Despite OPEC's recent decision to leave its crude oil production target at 30 million bbl/d, key producers could decide to reduce output, tightening market balances. The level of unplanned production outages could also vary from forecast levels for a wide range of producers, including OPEC members Libya, Iraq, Iran, Nigeria, and Venezuela. The degree to which non-OPEC supply growth is affected by lower oil prices will also affect market balances and prices.
Several OPEC and non-OPEC oil producers rely heavily on oil revenues to finance their fiscal budgets. Some producers have already started adjusting their upcoming budgets to reflect the crude oil price decline. If crude oil prices continue to fall or are sustained at a lower level, then oil-dependent producers will have to make tough policy decisions. These decisions could potentially lead to austerity programs and fuel subsidy cuts that could spark social unrest, leaving some countries vulnerable to supply disruptions if protesters target oil infrastructure. Potential new supply disruptions are a real possibility in a lower-than-expected price climate and present a major uncertainty in the world oil supply forecast.
|Global Petroleum and Other Liquids|
|2013||2014||2015 projected||2016 projected|
a Weighted by oil consumption.
b Foreign currency per U.S. dollar.
|Supply & Consumption||(million barrels per day)|
|OPEC Crude Oil Portion||29.92||29.87||29.91||29.65|
|Total World Production||90.18||92.18||92.97||93.51|
|OECD Commercial Inventory (end-of-year)||2550||2708||2775||2791|
|Total OPEC surplus crude oil production capacity||2.13||2.05||2.26||2.73|
|Total World Consumption||90.49||91.39||92.39||93.42|
|Primary Assumptions||(percent change from prior year)|
|World Real Gross Domestic Producta||2.7||2.7||2.9||3.2|
|Real U.S. Dollar Exchange Rateb||3.6||3.4||6.1||-0.1|
Interactive Data Viewers
|Today In Energy||Daily|
|2014 Summer Fuels Outlook Slideshow||Apr-2014|
|Uncertainties in the Short-Term Global Petroleum and Other Liquids Supply Forecast||Feb-2014|
|Key drivers for EIA's short-term U.S. crude oil production outlook||Feb-2013|
|Brent Crude Oil Spot Price Forecast||Jul-2012|
|Probabilities of Possible Future Prices||Apr-2010|
|Energy Price Volatility and Forecast Uncertainty||Oct-2009|