12 February 2008 19:20 [Source: ICIS news]
The department’s Energy Information Administration (EIA) said “the outlook over the next two years points to an easing of the oil market balance in 2008”.
“Higher production outside of the Organization of Petroleum Exporting Countries [OPEC] and planned additions to OPEC capacity should more than offset expected moderate world oil demand growth and relieve some of the tightness in the market,” the administration said in its monthly short-term energy outlook (STEO).
The administration said that worldwide surplus oil production capacity is projected to grow from its current level of less than 2m bbl/day to more than 4m bbl/day by the end of next year.
“This balance suggests some price softening,” the administration said, although it cautioned that delays or downward revisions in capacity additions by producers could alter the forecast.
Consequently, the administration has lowered by $1/bbl its forecast for the average price for West Texas Intermediate (WTI) crude for this year to $86/bbl. The 2007 average was $72/bbl.
Last month, in the wake of oil prices just above $99/bbl in November and December, the administration had forecast a 2008 WTI average price of $87/bbl. The administration’s forecast of an average $82/bbl WTI for 2009 was unchanged from its January prediction.
However, in natural gas the administration said it expects the Henry Hub price to increase to an average $7.83/m Btu this year and $7.93/m Btu in 2009. Last month the department’s energy analysis group had forecast an average gas price of $7.78 for this year and $7.92 in 2009.
The administration indicated that its expectation of higher gas prices was due chiefly to slower growth in US imports of liquefied natural gas (LNG) this year.
The availability and price of natural gas is a major concern for US chemicals manufacturers, who are heavily dependent on gas as a feedstock and energy source.
The sharp reduction in the LNG import growth rate is “due to the expectation of continued demand strength in Asia and Western Europe, which compete with the
In addition, said the agency, there is “uncertainty about [LNG] supply projects set to come online in late 2008 and early 2009”.
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