Price Movements Related to Supply/Demand Balance
*Total includes commercial and government stocks.
Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2001.
Notes:
EIA sees a tenuous supply/demand balance over the remainder of 2001 and into the beginning of 2002, as illustrated by the low OECD inventory levels. Global inventories remain low, and need to recover to more adequate levels in order to avoid continued price volatility.
While we saw some stocking in April and May, typical third quarter stock builds may not occur.
Even with Iraqi oil exports resuming in early July, OPEC was going to need to increase its oil production to account for demand increases over the 2nd half of the year to prevent stocks from falling further. However, they not only haven’t agreed to increase production, but agreed to cut production quotas by 1 million barrels per day beginning on September 1!
EIA’s forecast of a continued low stock cushion implies we not only should see continued high prices, but we also could experience price volatility from the crude oil market--apart from volatility stemming from product markets.