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 grew by 0.5 million bbl/d in August. The recent inventory builds are somewhat atypical for this time of year and signal a relatively loose global crude oil market compared with conditions over the past three years. Weaker oil demand and lower refinery runs in European and Asian countries within the Organization for Economic Cooperation and Development (OECD) this year have reduced market tightness. Nevertheless, these conditions may be temporary and the risk for tighter markets in the future remains elevated due to persistently high supply disruptions and relatively low surplus crude oil production capacity.
Geopolitical risks 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 to a near-halt. Iraq's southern crude oil exports still remain unaffected by the unrest in northern Iraq. In Libya, crude oil exports restarted in August at the country's two major eastern ports, Es Sidra and Ras Lanuf, after being blocked by protestors for about a year. However, the situation in Libya is still very precarious as the security situation remains volatile, with a significant possibility of intermittent disruptions.
EIA projects world petroleum and other liquids supply to increase by 1.6 million bbl/d in 2014 and by 1.3 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 1.8 million bbl/d in 2014 and 1.2 million bbl/d in 2015. The United States accounts for much of this growth. Projected world liquid fuels consumption grows by an annual average of 1.0 million bbl/d in 2014 and 1.3 million bbl/d in 2015. Non-OECD countries, notably China, drive expected consumption growth.
Global Petroleum and Other Liquids Consumption
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 1.0 million bbl/d in 2014 and 1.3 million bbl/d in 2015. Projected global oil-consumption-weighted real GDP, which increased 2.7% in 2013, grows by 2.7% and 3.3% in 2014 and 2015, respectively.
Non-OECD consumption is projected to grow by 1.3 million bbl/d in 2014 and 1.2 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 (3.5%) in 2014 and 0.43 million bbl/d in 2015.
EIA expects a 0.21-million-bbl/d decline in OECD consumption in 2014, led by projected consumption declines in both Japan and Europe. Japan's consumption, which fell by 0.16 million bbl/d in 2013, is projected to continue to decline by an annual average of 0.13 million bbl/d in 2014 and 0.16 million bbl/d in 2015. The projected decline reflects Japan's effort to reduce its share of oil 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. OECD Europe's consumption, which fell by 0.12 million bbl/d in 2013, is projected to decline by a further 0.12 million bbl/d in 2014 and by 0.03 million bbl/d in 2015. U.S. consumption, which increased by 0.47 million bbl/d in 2013, is expected to be mostly flat in 2014 and then increase by 0.15 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 1.8 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 1.4 million bbl/d in 2014 and 1.2 million bbl/d in 2015. EIA estimates that Eurasia's production will increase by less than 0.1 million bbl/d in 2014, with increased production from Russia and Kazakhstan offsetting declines in other countries, and stay relatively flat 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 August, slightly lower than the estimated July level. South Sudan, Syria, and Yemen accounted for more than 85% 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 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 0.1 million bbl/d in 2015 to accommodate growing production in non-OPEC countries.
Unplanned crude oil supply disruptions among OPEC producers averaged 2.4 million bbl/d in August 2014, 0.1 million bbl/d lower than the previous month mainly because of decreased outages in Libya. Libya's production increased to 0.5 million bbl/d in August, 0.3 million bbl/d higher than the second quarter 2014 average, but still well below the 1.4 million bbl/d the country produced before the major blockades started in mid-2013. Almost all of Libya's export terminals are able to export crude as protestors agreed to stop the blockades, and production has restarted in some of Libya's largest eastern oil fields. However, some of the major issues that incited the widespread protests over the past year remain unresolved. As a result, EIA does not expect Libya's oil production to recover to its preblockade 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 2.7 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 2.58 billion barrels at the end of 2014.
Crude Oil Prices
North Sea Brent crude oil spot prices averaged $102/bbl in August, a decrease of $5/bbl. Or 4.7%, from July. Brent crude oil prices were driven downward in large part because of weakening global oil demand as well as growing Libyan oil exports. August was the first in 13 consecutive months in which average Brent crude oil spot prices fell outside the relatively narrow range of $107/bbl to $112/bbl. The forecast Brent crude oil price averages $106/bbl in 2014, $2/bbl lower than in last month's STEO, and $103/bbl in 2015, $2/bbl lower than in last month's STEO.
The monthly average WTI crude oil spot price fell from a high of $106/bbl in June to $97/bbl in August. Driven in part by new pipelines delivering crude oil to refining centers along the Gulf Coast, crude oil inventory levels at the Cushing, Oklahoma, storage hub, the futures market's delivery point for WTI, fell below 18 million barrels on July 25, the lowest level since October 2008. Crude oil inventories then built for four consecutive weeks to reach 20.7 million barrels on August 22. After falling to an annual low of $3/bbl in July, the discount of WTI crude oil to Brent crude oil increased to $5/bbl in August. While record high refinery runs contributed to the WTI discount falling to $3/bbl in July, the discount widened in August while refinery runs remained elevated. EIA now expects WTI crude oil prices to average $93/bbl in the fourth quarter of 2014, $5/bbl lower than in last month's STEO, and $95/bbl in 2015. The discount of WTI to Brent crude oil is forecast to widen from current levels, averaging $10/bbl in the fourth quarter of 2014 and $8/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 December 2014 delivery, traded during the five-day period ending September 4, averaged $93/bbl. Implied volatility averaged 16%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in December 2014 at $81/bbl and $107/bbl, respectively. Last year at this time, WTI for December 2013 delivery averaged $106/bbl and implied volatility averaged 25%. The corresponding lower and upper limits of the 95% confidence interval were $86/bbl and $131/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||29.64||29.54|
|Total World Production||89.72||90.10||91.68||93.02|
|OECD Commercial Inventory (end-of-year)||2647||2551||2580||2604|
|Total OPEC surplus crude oil production capacity||2.11||2.14||2.18||2.74|
|Total World Consumption||89.17||90.51||91.55||92.89|
|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||2.4||1.8|
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