US oil demand and supply - EIA

US population-weighted heating degree-days for Q4 2002 were an estimated 21% above the previous-year Q4 total. US oil demand estimates for November and December indicate year-to-year growth of 2.5% and 6.1%, respectively. The December estimate, while very preliminary, suggests an increase of almost 1.2 mbd compared to the figure for December 2001, which would be one of the largest such increases on record.

However, from yearly estimates of the complete annual oil demand picture, it appears that overall demand grew by only about 0.3% in 2002 compared to the 2001 level. The events of September 2001 reduced commercial jet fuel demand. Other factors that affected demand were: weakness in industrial activity in the first half of the year, record warm weather in the first quarter of the year, and unfavourable relative price shifts that displaced sizable quantities of residual fuel oil deliveries. The same factors dampened total distillate consumption in all the major consuming sectors for much of the year. However, strong growth in motor gasoline demand, reflecting continuing consumer preference for large vehicles, offset any weakness in these areas. Fleet-wide fuel efficiency appears to have continued to decline. Moreover, increases in personal disposable income bolstered consumer demand for travel as well as new vehicles. In addition, total liquefied petroleum gas demand has been exhibiting strength as a petrochemical feedstock. But that demand growth results from a downward shift in extraction costs, which skyrocketed in early 2001 (due to high natural gas prices) and greatly dampened liquefied petroleum gas demand in 2001. The US is projected to import 11.37 mbd of crude oil in 2003 and 12.05 mbd in 2004 up from 10.90 mbd/10.20 mbd in 2001/2002.

US crude oil production is expected to fall by about 3% in 2003 to 5.62 mbd, and then fall by an additional 2% in 2004. Average domestic crude oil production, which declined by an average of 140,000 barrels per day per year between 1990 and 2001, last year remained about even with 2001 levels. Minimal declines were generally seen between 1999 and 2002. For the time being, Alaskan production appears to have more or less levelled out at just under 1 mbd, although gradual declines are expected over the next two years. Alaska is expected to account for 17.3% of total US oil production in 2004. Alaskan oil production is expected to decrease by 2.1% in 2003 with a further decline of 1.1% in 2004. Lower-48 output is expected to decline by about 0.18 mbd in 2003 and by slightly over 0.10 barrels per day in 2004.