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Short-Term Energy and Winter Fuels Outlook

Release Date: October 7, 2014  |  Next Release Date: November 12, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Global Petroleum and Other Liquids

EIA projects world petroleum and other liquids supply to increase by 1.6 million bbl/d in 2014 and by 0.9 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 1.9 million bbl/d in 2014 and 1.2 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 1.0 million bbl/d in 2014 and 1.2 million bbl/d in 2015.

Global disruptions to near-term supply have abated since June, when Libya's production and exports were at a minimal level, and violence in northern Iraq escalated, causing northern production (outside of Iraqi Kurdistan) to come nearly to halt. Iraq's southern crude oil exports still remain unaffected by the unrest in northern Iraq. In Libya, production averaged 0.8 million bbl/d in September, its highest level in more than 1 year. However, the security situation in Libya is still precarious, with a significant possibility of intermittent disruptions.

Global Petroleum and Other Liquids Consumption

EIA estimates that global consumption grew by 1.3 million bbl/d (1.5%) in 2013, averaging 90.4 million bbl/d for the year. EIA expects global consumption to grow by 1.0 million bbl/d in 2014 and 1.2 million bbl/d in 2015. Projected global oil-consumption-weighted real GDP, which increased by an estimated 2.7% in 2013, grows by 2.7% and 3.3% in 2014 and 2015, respectively.

Consumption outside of the Organization for Economic Cooperation and Development (OECD) is projected to grow by 1.2 million bbl/d in 2014 and 1.1 million bbl/d in 2015, accounting for nearly all forecast global consumption growth during that period. China is the leading contributor to projected global consumption growth, with consumption increasing by 0.37 million bbl/d in both 2014 and 2015.

EIA expects a 0.20-million-bbl/d decline in OECD consumption in 2014. Japan and Europe are expected to account for much of the projected OECD consumption declines. EIA expects Japan's consumption, which fell by 0.16 million bbl/d in 2013, to continue to decline by an annual average of 0.13 million bbl/d in 2014 and 0.14 million bbl/d in 2015. Japan's oil consumption is expected to fall as the country continues to reduce its share of oil used in the electricity sector, replacing it with natural gas, coal, and nuclear power as the country returns some nuclear power plants to service in 2015. EIA projects that OECD Europe's consumption, which fell by 0.15 million bbl/d in 2013, will decline by 0.13 million bbl/d in 2014 and by a further 0.02 million bbl/d in 2015. U.S. consumption, which increased by 0.47 million bbl/d in 2013, is expected to decline by 0.04 million bbl/d in 2014 and then increase by 0.17 million bbl/d in 2015.

Non-OPEC Petroleum and Other Liquids Supply

EIA estimates that non-OPEC production grew by 1.4 million bbl/d in 2013, averaging 54.1 million bbl/d for the year. EIA expects non-OPEC production to grow by 1.9 million bbl/d in 2014 and 1.2 million bbl/d in 2015. The United States is the leading contributor to forecast non-OPEC supply growth, increasing by 1.48 million bbl/d in 2014 and 1.23 million bbl/d in 2015. EIA estimates that Eurasia's production will rise by an annual average of 0.08 million bbl/d in 2014 and 0.02 million bbl/d in 2015. This forecast assumes the current economic sanctions on Russia do not affect Russian oil production in the short term.

Unplanned supply disruptions among non-OPEC producers averaged nearly 0.6 million bbl/d in September, down slightly from the previous month. South Sudan, Syria, and Yemen accounted for more than 90% 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.

OPEC Petroleum and Other Liquids Supply

EIA estimates that OPEC crude oil production averaged 29.9 million bbl/d in 2013, a decline of 0.99 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 0.2 million bbl/d in 2014 and by more than 0.4 million bbl/d in 2015 to accommodate growing production in non-OPEC countries.

Unplanned crude oil supply disruptions among OPEC producers averaged 2.2 million bbl/d in September 2014, 0.2 million bbl/d lower than the previous month because of decreased outages in Libya. Libya's production increased to 0.8 million bbl/d in September, 0.3 million bbl/d higher than the previous month, but still well below the 1.4 million bbl/d the country produced before the major blockades started in mid-2013. Libya still faces a considerable challenge in ramping up production to its full capacity or even sustaining it at the current level. Despite the recent production increase, the security situation has deteriorated in parts of the country, and the evacuation of foreign workers is inhibiting production levels from reaching capacity at some fields. As a result, EIA does not expect Libya's oil production to recover to its pre-blockade level over the forecast period.

EIA expects OPEC surplus crude oil production capacity, which is concentrated in Saudi Arabia, to average 2.2 million bbl/d in 2014 and 3.0 million bbl/d in 2015. 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 2.62 billion barrels at the end of 2014.

Crude Oil Prices

North Sea Brent crude oil spot prices averaged $97/bbl in September, a decrease of $5/bbl from August and the first month Brent crude oil prices have averaged below $100/bbl since June 2012. Brent crude oil prices were driven downward in large part because of weakening global oil demand and higher Libyan oil exports (EIA, This Week in Petroleum, September 24, 2014). The forecast Brent crude oil price averages $104/bbl in 2014 and $102/bbl in 2015, $2/bbl lower and $1/bbl lower than projected in last month's STEO, respectively.

The monthly average WTI crude oil spot price fell from an average of $97/bbl in August to $93/bbl in September. High refinery runs contributed to the discount of WTI crude oil to Brent crude oil falling from an average of $8/bbl during the first half of this year to an average of $4/bbl in the third quarter. EIA now expects WTI crude oil prices to average $91/bbl in the fourth quarter of 2014 and $95/bbl in 2015. The discount of WTI to Brent crude oil is forecast to widen from current levels, averaging $7/bbl in the fourth quarter of 2014 and 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 January 2015 delivery, traded during the five-day period ending October 2, averaged $91/bbl. Implied volatility averaged 19%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in January 2015 at $76/bbl and $107/bbl, respectively. Last year at this time, WTI for January 2014 delivery averaged $102/bbl and implied volatility averaged 20%. The corresponding lower and upper limits of the 95% confidence interval were $85/bbl and $121/bbl.

Global Petroleum and Other Liquids
  2012 2013 2014 2015
a Weighted by oil consumption.
b Foreign currency per U.S. dollar.
Supply & Consumption (million barrels per day)
Non-OPEC Production 52.77 54.12 55.98 57.15
OPEC Production 37.00 36.03 35.78 35.51
OPEC Crude Oil Portion 30.91 29.92 29.68 29.24
Total World Production 89.77 90.15 91.76 92.67
OECD Commercial Inventory (end-of-year) 2646 2551 2622 2623
Total OPEC surplus crude oil production capacity 2.11 2.13 2.19 2.99
OECD Consumption 45.90 46.04 45.84 46.01
Non-OECD Consumption 43.24 44.41 45.63 46.70
Total World Consumption 89.14 90.45 91.47 92.71
Primary Assumptions (percent change from prior year)
World Real Gross Domestic Producta 2.7 2.7 2.7 3.3
Real U.S. Dollar Exchange Rateb 3.8 3.6 2.6 2.3

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