Oil markets are expected to continue to tighten through 2012 given projected world oil demand growth and slowing growth in supply from non-OPEC countries, the U. S. Energy Information Administration (EIA) said Tuesday.
During the first week of May, West Texas Intermediate (WTI) crude oil prices fell by nearly 17 U.S. dollars per barrel to 97 dollars per barrel, along with a broad set of commodities, and then rebounded by almost 6 per barrel Monday, according to a monthly report released Tuesday by the EIA.
EIA predicted that WTI spot prices will average 103 dollars per barrel in 2011 and 107 dollars per barrel in 2012, reductions of about 4 and 6 dollars per barrel respectively from the agency's last month's outlook.
EIA expects total world oil consumption to grow by 1.4 million barrels per day in 2011, which is about 0.1 million bbl/d day lower than last month's outlook, and 1.6 million bbl/d in 2012, slightly higher than forecast last month.
World crude oil and liquid fuels consumption grew to 86.7 million bbl/d in 2010, surpassing the previous record of 86.3 million bbl/d set in 2007.
EIA expects that world liquid fuels consumption will grow by 1. 4 million bbl/d in 2011, followed by 1.6 million bbl/d growth in 2012, resulting in total world consumption of 89.7 million bbl/d in 2012.
Supply from nonOPEC countries will increase by an average of about 0.6 million bbl/d annually through 2012, which is about 0.2 million bbl/d higher than in last month's outlook.
Forecast OPEC crude oil production declines in 2011, falling by about 450,000 bbl/d, followed by an increase of 640,000 bbl/d in 2012, according to the EIA report.
EIA expects the market will rely on both a drawdown of inventories and increases in the production of crude oil and non crude liquids in OPEC member countries to meet projected demand growth.
EIA forecasts that the annual average regular-grade retail gasoline price will increase from 2.78 dollars per gallon in 2010 to 3.63 per gallon 2011 and to 3.66 per gallon in 2012.
The agency expects that working gas inventories will build strongly during the summer and approach record-high levels in the second half of 2011.
The projected Henry Hub natural gas spot price averages 4.24 dollars per million British thermal units (MMBtu) in 2011, 0.15 dollars per MMBtu lower than the 2010 average.
EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of 4.65 dollars per MMBtu.
