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Friday, September 21, 2018

Short-term energy outlook - EIA

In its October 2002 short-term energy outlook the US Energy Information Administration (EIA) points towards continued high oil prices which are the result of declining OECD commercial oil inventories, worries over a potential war with Iraq, and OPEC’s decision to leave production quotas unchanged at its September meeting. Should there be solid growth in world oil demand this winter this would further tighten world oil markets and reduce commercial inventories.

In September 2002 OPEC 10 production is estimated at 2.2 mbd above quota levels. EIA assumes in its short-term energy outlook that Iraqi oil production will fluctuate around 1.9 mbd and that OPEC 10 production will rise further over the rest of 2002 in order to prevent prices from rising above OPEC’s target range. EIA project that world oil demand in the fourth quarter of 2002 will increase by 1.4 mbd over the third quarter and that additional oil will be needed to keep OECD commercial oil stocks within their observed 5-year range.

 

EIA reports that the US economy is forecast to grow by 3% annually in 2003 (2002 growth estimated at 2.3%), which will contribute to a modest recovery in US and world oil demand. About half of the 1.2 mbd growth in the 2003 world oil demand is projected to come from the US, with China and other non-OECD countries projected to provide about 0.5 mbd of additional oil demand growth in 2003. Because of the OPEC 10 production restraint, non-OPEC sources are expected to supply most of this projected incremental oil demand. About half of the anticipated 1 mbd 2003 non-OPEC oil supply growth is expected to come from additional oil exports from Russia and the Caspian Sea region. Offshore Africa, Mexico and Canadian synthetic oil productions are also expected to increase. OPEC 10 production increases in 2003 will most likely be limited to a few hundred thousand barrels per day.

 

EIA report that recent weekly and monthly US oil demand data point to a small turnaround in domestic demand, which suggests that the economy may be undergoing a gradual recovery. Nonetheless, year-to-date estimates for oil deliveries are still close to 1% lower than during the same period in 2001. Total US oil demand for 2002 is projected to show a slight growth for the year as a whole. 2002 oil demand is estimated at 19.73 mbd up 0.3% or 0.06 mbd from 2001. Average 2002 US oil production is projected at 5.87 mbd a 1.2% or 0.07 mbd increase from 2001. For 2003, a 1.7% decline in US oil production is expected which will result in a production of 5.77 mbd. This projection would entail a growth in US oil imports. EIA forecast a growth in total net oil imports (including Strategic Petroleum Reserve (SPR) imports) of 8% in 2003.