-Sees Build Up in Global Oil Inventories in 1st Half 2013
-Sees Looser Oil Market in Q4; More Supply
By Brai Odion-Esene
WASHINGTON (MNI) – When the curtain falls on 2012, U.S. oil production
will have witnessed its largest rise in annual output since the middle of the
19th Century, the U.S. Energy Information Administration predicted Tuesday.
EIA said oil markets have loosened in the fourth quarter as more world
supply comes online, and while it raised its estimate of oil consumption next
year, the agency stayed close to its forecast for benchmark global oil prices
the rest of this year and into 2013, according to its December Short Term Energy
Outlook.
The agency expects U.S. total crude oil production to average 6.4 million
barrels a day in 2012, an increase of 760,000 from the previous year.
“The expected 760,000 barrel-per-day increase in U.S. crude oil production
this year is the largest rise in annual output since the beginning of U.S.
commercial crude oil production in 1859,” EIA Administrator Adam Sieminski said
in a statement.
Projected domestic crude oil production increases to 7.1 million bpd in
2013, 0.2 million higher than projected in last month’s report and the highest
annual average rate of production since 1992.
Sieminski also noted that a month after superstorm Sandy ravaged the U.S.
Northeast, “refined oil product markets have mostly returned to normal
operations.”
“While the storm’s adverse impacts to energy infrastructure in the region
were significant, interruptions to product supply were largely offset by reduced
petroleum demand and falling crude prices, as reflected in declining retail
gasoline prices,” he added.
With regards to gasoline, the EIA said monthly average regular gasoline
retail prices fell to $3.45 a gallon in November from $3.85 a gallon in
September “as crude oil prices fell and the gasoline market transitioned from
summer-grade to lower-cost winter-grade gasoline specifications.”
EIA is forecasting national regular gasoline retail prices to average $3.63
a gallon in 2012 and $3.43 in 2013, compared with $3.53 in 2011. Forecast calls
for diesel fuel retail prices average $4.02 a gallon during the fourth quarter
of 2012 before falling to an average of $3.84 in 2013.
World liquid fuels production is projected to increase by 0.1 million bpd
from the third quarter to the fourth quarter of 2012 as OPEC members continue to
produce more than 30 million bpd of crude oil and non-OPEC countries recover
from unplanned outages and scheduled maintenance, the report said.
“EIA expects global inventories to build during the first half of 2013,
mostly due to continued growth in U.S. and other non-OPEC supply,” it said.
Global oil consumption is projected to rise by 0.96 million bpd in 2013 to
average 90 million bpd, EIA said. This is an increase from November’s Short Term
Energy Outlook, which forecast demand to grow by 0.89 million bpd next year to
average 89.94 million bpd.
The agency warned that while it does not assume any “significant
deterioration” of the U.S. or EU economies next year, “movements in oil prices
could include changing market assessments about the downside risks to future
consumption from the so-called fiscal cliff in the United States or concerns
over eurozone economic stability.”
EIA projects Brent crude oil will average $112 a barrel in 2012 and $104 in
2013, both mostly unchanged from last month’s Outlook. (Since Adam Sieminski
began his tenure as EIA Administrator earlier this year, the agency has provided
a forecast of Brent spot prices, arguing that it better reflects current oil
market conditions.)
EIA revised its forecast for West Texas Intermediate, the U.S. benchmark
crude, sayng the average spot price in Q4 would fall to $89 a barrel from $90 in
last month’s report. It is expected to remain around this level for most of next
year, averaging $88 per barrel.
On the supply side, the EIA report forecast non-OPEC production to rise by
1.29 million bpd in 2013 to average 53.79 million bpd, “largely due to continued
production growth from U.S. tight oil formations and Canadian oil sands.”
OPEC will continue to produce more than 30 million bpd over the next two
years “to accommodate the projected increase in world oil consumption and to
counterbalance supply disruptions,” the report said.
Still, the EIA projects OPEC crude oil production will rise to 30.35
million bpd in 2013 from 31 million this year.
The group meets in Vienna Wednesday, and is widely expected by analysts to
maintain its existing production policies.
Within OPEC, the EIA cautioned that still-recovering Libya will find it
hard to sustain production at full capacity until political and security
conditions improve.
“At the very least, Libya poses a greater upside than downside risk to the
oil price forecast, as the potential production loss from more significant
disruptions exceeds the potential short-term production gains from a sector that
has already significantly recovered,” it said.
Global OPEC surplus capacity, which remains overwhelmingly concentrated in
Saudi Arabia, “remained relatively tight by historical standards,” and is
estimated at 2.0 million bpd over the past three months, the report said. OPEC
surplus capacity is forecast to increase to 3.3 million bpd by the second
quarter of 2013.
EIA expects natural gas consumption to average 69.7 billion cubic feet a
day in 2012, basically unchanged from last month’s forecast.
Growth in total natural gas consumption is then forecast to average 69.4
Bcf a day in 2013, a slight decline as “as increases in residential and
commercial consumption offset the declines in electric power use.”
Natural gas spot prices averaged $3.54 per MMBtu at the Henry Hub in November,
up $0.23 per MMBtu from the October average, EIA said. Prices are expected to
average $2.78 per MMBtu in 2012, compared to the $2.77 expected in November’s
report, while the price is now seen hitting $3.68 next year, an upward revision
from $3.49 last month.
–MNI Washington Bureau; tel: +1 202-371-2121; email: besene@mni-news.com
[TOPICS: MAUDS$,M$U$$$,MI$$$$,MI$OI$,MN$OI$]