Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: BigBull who wrote (59904)	2/8/2000 2:24:00 PM
From: SargeK	of 95453

The base case trajectory for oil prices implies monthly West Texas Intermediate (WTI) spot prices above $22 through 2001. February 2000 Highlights DOE International Oil Markets Prices. Note: The benchmark crude oil value referred to in this report, the average cost per barrel of crude oil imported into the United States and delivered to U.S. refiners, is a broad gauge of international oil costs. Its relation to the oft-cited West Texas Intermediate (WTI), which is the benchmark crude for the U.S. (NYMEX) crude futures market, is that spot WTI is generally $2.00 above the imported cost. We have raised our world oil price projection by about $2 per barrel for this month because of assumed greater compliance by OPEC to targeted cuts, especially for the second quarter of 2000. The expected decline in world petroleum inventories continues, and, given the generally stiff resolve of OPEC members to maintain production cuts, any sign of a turnaround in stocks may be postponed until later this year than previously assumed (Q3 instead of Q2). Our current estimate for the average refiner cost of imported oil this past January is now $25 per barrel, a nearly $15-per-barrel increase from January 1999. Crude oil prices are expected to remain at relatively high levels for the first half of 2000, but should gradually recede if OPEC expands production as assumed. Average U.S. refiner import costs under our base case assumptions would be $24.21 per barrel in 2000 and $21.36 next year. The base case trajectory for oil prices implies monthly West Texas Intermediate (WTI) spot prices above $22 through 2001. A chance for a break in the price pressure comes with an expected increase in world demand of only 1.2 million barrels per day this year. Otherwise, current (relatively high) price levels may persist longer than indicated in the base case. The upper bound of our uncertainty range for crude oil prices suggests the extent of our take on upside price risk. eia.doe.gov

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