Energy Report Says Global Demand To Prop Up Heating-Oil Prices
WASHINGTON -(Dow Jones)- Due to strong demand in the U.S. and Europe, the price of heating oil will probably remain about 10 to 15 cents a gallon higher this winter than last year, the U.S. Department of Energy forecast Friday. World-wide petroleum demand is projected to increase by 1.7 million barrels a day in 1997. The DOE's Energy Information Administration said global demand for petroleum is increasing at record levels, with a projected average annual demand rate of 71.9 million barrels a day this year. Assuming normal winter weather for the first quarter of 1997, heating-oil prices in the U.S. are expected to average about $1.06 a gallon, 10 cents higher than the same period a year ago, said the EIA. If there is a colder than normal winter, prices could jump 15 cents a gallon over 1996. Jay Hakes, head of the DOE's Energy Information Administration, said there are increased supplies of heating oil but prices are unlikely to ease because of high demand. The EIA also said that 1997 gasoline prices likely will remain about the same as they were during the peak summer driving months last year. Hakes attributed the continuing high cost of both gasoline and heating oil to higher-than-expected crude oil prices and the industry's policy of keeping inventories low in anticipation of lower crude prices in the future. The EIA estimated that crude prices in 1997 and into 1998 will average $21 to $21.50 a barrel, about $2.50 more than previously forecast. An average decline of about $1 a barrel is expected between the fourth quarter of 1996 and the end of the first quarter of 1997, mainly due to the fact that Iraqi crude is now flowing, the EIA said.
Motorists across the country are likely to see continuing high gasoline prices due to tight inventories and high demand. Hakes said gasoline stocks are lower than normal. The department predicted
that during the peak driving season this summer, gasoline will likely average what it did last year, about $1.36 to $1.38 a gallon.
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