Strong oil demand to tighten supplies -- DOE sees natgas demand up 12% vs. year ago {CBS.MarketWatch.com, 2:01 PM ET Sept. 6, 2002}
{excerpt} -- Solid growth is expected in oil demand this winter and in 2003, which will likely tighten world inventories, DOE said Friday in its monthly short-term outlook.
DOE said it expects oil demand to rise by 1.4 million barrels per day in the fourth quarter above third-quarter levels. It also expects additional oil will be needed to keep commercial oil inventories in industrialized countries within their observed 5-year range.
The improvement expected in the U.S. economy at the end of this year and in 2003 will likely mean a recovery of world oil demand DOE said. U.S. demand is expected to account for about half of the 1.2 million-barrel-per-day growth in world oil demand in 2003, it noted.
Last week, U.S. crude inventories fell by 4.6 million cubic feet, DOE said. West Texas Intermediate spot crude oil prices have been bouncing between $26 and $30 per barrel since early August, amid "the waxing and waning intensities of concern surrounding potential military action against Iraq and uncertainty over OPEC production policy leading up to their Sept. 19 meeting," DOE said.
A "modest measure of restraint" by OPEC in oil output would probably keep prices closer to $30 a barrel than $20 through 2003, "even if the political and military status quo are maintained," it said.
For now, DOE expects OPEC's basket price of seven crudes to remain between its target of $22 to $28, with a rise through early 2003 and a leveling off in mid-year.
Natural gas demand seen rising -- Demand for natural gas this winter will likely be 12 percent higher than the year-ago level, DOE said. However, "much of the accumulated cushion in natural gas storage will probably be expended toward feeding consumption growth," it said. Domestic supplies rose 65 billion cubic feet last week to 2.781 trillion cubic feet.
The agency expects natural gas wellhead prices to average $3.20 per thousand cubic feet, 80 cents above last winter's price. In 2003, the average wellhead price is seen at $3.28, up from $2.80 last year.
Gasoline prices to climb -- DOE warned that gasoline prices at the retail level could rise over the next few months, as long as crude prices continue to climb. "Ample gasoline supplies this year provided a cushion in the market and thus a price ceiling for much of the spring and summer," DOE said. But in 2003, retail gasoline prices could rise 10 cents to 15 cents a gallon compared with 2002, assuming a continued rise in crude prices and recovering refiner margins as economic growth boosts demand.
cbs.marketwatch.com{7CC8ABF6-0469-4EB1-8991-5993B4E92B33}&siteid=myyahoo
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que,
I did not see where DOE forecast 2003 NG drilling or completions as higher than 2001 --
eia.doe.gov
{excerpt} NG-directed drilling, while down sharply from 2001 levels, is still quite strong by a longer historical perspective. Nevertheless, NG drilling activity has fallen significantly from the peaks seen in July 2001, which were spurred by extremely high prices for natural gas. Baker Hughes reported average active rigs drilling for natural gas in August at 721, 43 percent below the year-ago level. Aggregate lease revenues from domestic oil and NG production are expected to move up this year and settle at about $330 million per day in 2003, which would be approximately a 30-percent increase over the rates seen at the end of 2001. Inasmuch as these revenues are a strong determinant of industry cash flow, which in turn is a powerful driver of drilling activity levels, an upward trend in drilling levels generally (and NG-directed drilling in particular) is anticipated for this year and into 2003. Thus, NG drilling appears to be in the early stages of a renewed upswing in activity.
eia.doe.gov |
