The U.S. Energy Information Administration has predicted world oil prices, as indicated by the price of U.S. oil imports, will climb from $9.25/bbl last December to about $13 by yearend 1999.
EIA's latest short-term energy outlook predicts the world oil price would exceed $14/bbl by yearend 2000-still below the 1997 average of $18.60.
Supply/demand
EIA said world oil supply is expected to increase only 600,000 b/d in 1999 and another 1.1 million b/d in 2000.
"Meanwhile, world oil demand is expected to grow at a faster rate through 2000 than it did in 1998, suggesting an end to the build-up of world oil stocks seen since 1995, EIA said.
It said that, despite an assumption of slower economic growth, U.S. petroleum demand is expected to increase in 1999 by more than 500,000 b/d, or 2.9%, from 1998 levels.
"Much of this growth is expected as a result of increases in demand for heating oil and other weather-sensitive products (such as propane and heavy fuel oil), based on an assumed return to normal weather patterns, as well as continued growth in transportation demand.
"U.S. petroleum demand is expected to rise by an additional 300,000 b/d in 2000. U.S. net imports of petroleum in 2000 are forecast to account for 52% of total U.S. petroleum demand, up from an estimated 50% in 1998."
Heating oil, gas prices
EIA expects first quarter U.S. heating oil prices to rise an average of just 2¢/gal from fourth quarter 1998 prices, a level still 10¢/gal below the first quarter 1998 average.
EIA said natural gas spot prices are projected to remain under $2/Mcf through summer 1999, unless the weather in the (net) gas-consuming regions turns unusually cold over the next few months.
It said high storage levels will serve to moderate prices.
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