U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Global Petroleum and Other Liquids
EIA projects world petroleum and other liquids supply to increase by 1.5 million bbl/d in 2014 and by another 1.2 million bbl/d in 2015, with most of the growth coming from countries outside of the Organization of the Petroleum Exporting Countries (OPEC). Forecast non-OPEC supply grows by 1.7 million bbl/d in 2014 and 1.0 million bbl/d in 2015. The United States and Canada account for much of this growth. Projected world liquid fuels consumption grows by an annual average of 1.1 million bbl/d in 2014 and 1.5 million bbl/d in 2015. Countries outside the Organization for Economic Cooperation and Development (OECD), notably China, drive expected consumption growth.
The escalation of violence in northern Iraq that started in June has introduced significant uncertainty into the Iraq oil production outlook. EIA has reduced Iraq's production forecast from last month's STEO, maintaining production near 3.3 million bbl/d over the forecast, which was Iraq's average production level during the first half of 2014.
Global Petroleum and Other Liquids Consumption
EIA estimates that global consumption grew by 1.3 million bbl/d (1.5%) in 2013, averaging 90.5 million bbl/d for the year. EIA expects global consumption to grow by 1.1 million bbl/d in 2014 and 1.5 million bbl/d in 2015. Projected global oil-consumption-weighted real GDP, which increased by an estimated 2.6% in 2013, grows by 2.8% and 3.4% in 2014 and 2015, respectively.
Non-OECD countries account for nearly all of the expected consumption growth in 2014 and 2015. China is the leading contributor to projected global consumption growth, with consumption increasing by 400,000 bbl/d (3.7%) in 2014 and 430,000 bbl/d in 2015. However, China's economic and oil consumption growth rates have moderated compared with rates before 2012, when annual GDP growth exceeded 9% and oil consumption growth averaged almost 800,000 bbl/d from 2009 through 2011.
EIA expects a decline in OECD consumption in 2014, led by projected consumption declines in both Japan and Europe. EIA expects Japan's oil consumption to fall by an annual average of 130,000 bbl/d in 2014 and 160,000 bbl/d in 2015, as the country continues to increase natural gas and coal consumption in the electricity sector and returns some nuclear power plants to service in 2015. EIA projects that OECD Europe's consumption, which fell by 110,000 bbl/d in 2013, will decline by 120,000 bbl/d in 2014 and then increase by 60,000 bbl/d in 2015. U.S. liquids consumption, which increased by 400,000 bbl/d in 2013, is expected to be largely unchanged in 2014 and then increase by 70,000 bbl/d in 2015.
EIA estimates that non-OPEC liquids production grew by 1.4 million bbl/d in 2013, averaging 54.1 million bbl/d for the year. EIA expects non-OPEC liquids production to grow by 1.7 million bbl/d in 2014 and 1.0 million bbl/d in 2015. EIA forecasts production from the United States and Canada to grow by a combined annual average of 1.6 million bbl/d in 2014 and 1.0 million bbl/d in 2015. EIA estimates that the Former Soviet Union's production will rise by an annual average of 120,000 bbl/d in 2014, led by Russia. However, production in the region declines by 100,000 bbl/d in 2015. The expected completion of phase one of Kazakhstan's Kashagan field has been pushed back to the first half of 2016 because of continued problems delaying the start of commercial production.
Unplanned supply disruptions among non-OPEC producers averaged 0.6 million bbl/d in June, down from an estimated 0.7 million bbl/d in May. South Sudan, Syria, and Yemen accounted for 83% of total non-OPEC supply disruptions. EIA does not assume a disruption to oil supply or demand as a result of ongoing events in Ukraine.
EIA estimates that OPEC crude oil production averaged 29.9 million bbl/d in 2013, a decline of 1.0 million bbl/d from the previous year, primarily reflecting increased outages in Libya, Nigeria, and Iraq, along with strong non-OPEC supply growth. EIA expects OPEC crude oil production to fall by 0.3 million bbl/d in 2014 and by an additional 0.1 million bbl/d in 2015 to accommodate growing production in non-OPEC countries.
In Libya, force majeure on oil exports from the two largest eastern oil ports (Es-Sidra and Ras Lanuf - combined effective export capacity of 550,000 bbl/d) were lifted after the rebel group blockading the ports agreed to return them to the government. Although the deal is a major step forward, given the fragility of the situation and the failure of past deals, it is highly uncertain if this deal will materialize into a sustained recovery of Libya's eastern exports. In April 2014, a similar deal was made to return control of two smaller eastern ports (Marsa al-Hariga and Zueitina with combined export capacity of 200,000 bbl/d). However, the deal did not lead to a substantial increase in production and exports because instability and sporadic blockades continued. For now, EIA's short-term forecast for Libya remains unchanged, assuming a small recovery in 2015 but still well below the 2012 crude production level of 1.37 million bbl/d.
Unplanned crude oil supply disruptions among OPEC producers averaged 2.7 million bbl/d in June 2014, slightly higher than the previous month because of increased outages in Iraq. The escalation of violence in northern Iraq that started in June has not reduced the availability of exports to the global market, as southern exports have been unaffected and northern exports were halted in early March 2014. The recent events have mainly affected Iraq's crude oil supply to its largest domestic refinery, which had been processing approximately 0.2 million bbl/d of crude oil. The northern Baiji refinery was shut down during the second half of June, reducing northern Iraqi crude oil and petroleum product production. Crude oil production in southern Iraq of roughly 2.8 million bbl/d and in the Iraqi Kurdistan Region of roughly 0.2 million bbl/d has not been disrupted.
Recent events have introduced a high level of uncertainty in Iraq, and as a result, EIA has reduced its forecast production growth in Iraq by about 0.3 million bbl/d in both 2014 and 2015. EIA does not expect Iraq's crude production to exceed 3.3 million bbl/d, its average level during the first half of 2014, during the STEO forecast period. EIA expects Saudi Arabia to maintain a higher production level through 2014 to offset the loss of Iraq's growth. In 2015, Saudi Arabia's annual production is still projected to decline to accommodate growing output in non-OPEC countries, albeit to a lesser extent than previously expected.
EIA expects OPEC surplus crude oil production capacity, which is concentrated in Saudi Arabia, to average 2.0 million bbl/d in 2014 and 2.7 million bbl/d in 2015. These surplus capacity projections are 0.2 million bbl/d and 0.8 million bbl/d lower than last month's STEO, respectively. The reduction in surplus capacity from last month's STEO mainly reflects increased forecast production from Saudi Arabia. These estimates do not include additional capacity that may be available in Iran but is offline because of the effects of U.S. and European Union sanctions on Iran's ability to sell its oil.
OECD Petroleum Inventories
EIA estimates that OECD commercial oil inventories totaled 2.55 billion barrels at the end of 2013, equivalent to roughly 55 days of consumption. Projected OECD oil inventories rise to 2.60 billion barrels at the end of 2014.
Crude Oil Prices
North Sea Brent crude oil spot prices averaged $112/bbl in June, an increase of $2/bbl from May. This was the 12th consecutive month in which average Brent crude oil spot prices fell within a relatively narrow range of $107/bbl to $112/bbl. The escalating conflict in Iraq, continued record-high levels of Chinese crude oil imports in 2014, and ongoing delays to Libyan oil exports have contributed to upward price pressure. The forecast Brent crude oil price averages $110/bbl in 2014, $2/bbl higher than estimated for 2014 in last month's STEO, and $105/bbl in 2015, which is $3/bbl higher than in last month's STEO.
The WTI crude oil spot price increased from an average of $102/bbl in May to $106/bbl in June. Driven in part by the relocation of crude oil to refining centers along the Gulf Coast through new pipelines, crude oil inventory levels at the Cushing, Oklahoma, storage hub, the delivery point for WTI, have fallen by more than half since the start of the year, from 42 million barrels on January 24 to below 21 million barrels on June 27, the lowest level since November 2008. The discount of WTI crude oil to Brent crude oil, which averaged more than $13/bbl from November 2013 through January 2014, has since fallen to $6/bbl in June. The U.S. Commerce Department's Bureau of Industry and Security (BIS) recently authorized two companies to export stabilized lease condensate processed in a distillation tower. EIA now expects the discount of WTI to Brent crude oil to average $9/bbl in the second half of 2014, which is $1/bbl lower than last month's STEO. EIA expects the discount to average $10/bbl in 2015.
Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the forecast levels (Market Prices and Uncertainty Report). WTI futures contracts for October 2014 delivery, traded during the five-day period ending July 2, averaged $104/bbl. Implied volatility averaged 14%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in October 2014 at $92/bbl and $118/bbl, respectively. Last year at this time, WTI for October 2013 delivery averaged $98/bbl and implied volatility averaged 21%. The corresponding lower and upper limits of the 95% confidence interval were $81/bbl and $118/bbl.
|Global Petroleum and Other Liquids|
|2012||2013||2014 projected||2015 projected|
a Weighted by oil consumption.
b Foreign currency per U.S. dollar.
|Supply & Consumption||(million barrels per day)|
|OPEC Crude Oil Portion||30.91||29.91||29.59||29.52|
|Total World Production||89.78||90.24||91.77||92.94|
|OECD Commercial Inventory (end-of-year)||2647||2555||2598||2584|
|Total OPEC surplus crude oil production capacity||2.11||2.14||2.04||2.68|
|Total World Consumption||89.17||90.49||91.62||93.08|
|Primary Assumptions||(percent change from prior year)|
|World Real Gross Domestic Producta||2.8||2.6||2.8||3.4|
|Real U.S. Dollar Exchange Rateb||3.8||3.6||2.6||1.5|
Interactive Data Viewers
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|Key drivers for EIA's short-term U.S. crude oil production outlook||Feb-2013|
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