Optimistic DOE info from Doomberg
Energy News
Fri, 3 Dec 1999, 12:13pm EST
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U.S. EIA Sees High Oil Price Even if OPEC Ups Supply (Update1)
U.S. EIA Sees High Oil Price Even if OPEC Ups Supply (Update1)
(Adds end-of-year stockpiling and natural gas in last 6
paragraphs.)
New York, Dec. 2 (Bloomberg) -- Prices for U.S. benchmark
West Texas Intermediate crude oil are expected to stay above $22
a barrel after March even if OPEC boosts production, the
forecasting arm of the Department of Energy said.
The world is using more oil than it produces, and ``even a
large increase in supply may not be enough to have world oil
supply greater than world oil demand in 2000,' the DOE's
Energy Information Administration said in its latest monthly
``Short Term Energy Outlook.'
Crude oil traded on the New York Mercantile Exchange, which
covers West Texas Intermediate and several other grades, rose
above $27 a barrel last week for the first time since January
1991 and closed today at $25.82 a barrel. Production cutbacks
from the Organization of Petroleum Exporting Countries have
helped double prices this year, and the EIA said it is
``unclear' what OPEC will do when those cuts expire on March 31.
The EIA expects world demand for oil to rise by 1 million
barrels a day this year, and 1.4 million barrels a day next year.
World production will also rise next year. The forecasting unit
forecasts a 1.3 million-barrel-a-day rise in OPEC supply from
average 1999 levels, and an 800,000 barrel-a-day increase from
other countries.
High Heating Oil
This winter, U.S. residential heating oil consumers can
expect to pay $1.08 a gallon for home heating oil, up 28 cents
from last winter. That forecast assumes that the U.S. winter will
be a normal one, following an unusually warm winter last year.
``However, if the winter turns out to be another warm one,
then distillate stocks would swell and heating oil prices would
not rise as much as projected,' the report said.
The EIA reiterated its earlier concern that oil prices may
be additionally boosted this month by precautionary stockpiling
to guard against any possible disruptions to supply from
malfunctioning computers on the arrival of the year 2000.
``EIA is estimating that about 17 million barrels, or
slightly less than 200,000 barrels per day, of oil products that
would normally be supplied in the first quarter of 2000 will be,
or has already been, made available' to prepare for the new
year, the report said.
Global disruptions to oil supply related to the changeover
to 2000 are expected to be minimal, the EIA said.
While oil prices have risen during the past month because of
lower supply, natural gas prices have been falling because of
``extraordinarily warm November weather, which greatly reduced
demand for heating and left gas in storage at high levels,' the
EIA said. ``No November in the U.S. since 1931 has been even
close to being this warm,' it added.
Natural gas futures traded on the Nymex fell 22 percent last
month and closed today at $2.461 per million British thermal
units for January delivery.
With the bulk of the heating season still to come and
storage levels expected to be lower than last year, the EIA
expects wellhead prices for natural gas to average about $2.28
per million Btu in the first quarter of 2000, up 31 percent from
a year earlier.
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