Crude oil predicted to approach US$30 per barrel by fallgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Crude oil predicted to approach US$30 per barrel by fall BLOOMBERG, WASHINGTON
Crude oil will rise close to US$30 a barrel by the end of the summer, spurred by an Iraqi export halt and OPEC's decision this week to keep output quotas unchanged after cutting them twice this year, the Energy Department said.
The price of West Texas Intermediate, the benchmark crude oil grade that's traded on the New York futures market, will rise from the current US$28 a barrel as inventories decline because of the cuts by OPEC and a monthlong suspension of exports by Iraq.
"During the first half of the year, we had Iraqi production running and didn't really feel the effects of the OPEC cuts," Dave Costello, an Energy Department economist who was the lead author of the report, said in an interview. "The impact of the OPEC cuts, especially the April one, will show up in coming months, lending support to prices."
Rising demand will also help send inventories lower, the report said. World demand in 2001 is forecast to grow by 1.2 million barrels a day. That's slower than the June forecast of 1.3 million barrels and the 1.6 million predicted in February.
"They are more bullish than I am," said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc in St. Louis. "They are looking for strength in the economy and demand that I don't see in the market."
While oil prices may rise, retail gasoline in the US will probably decline, according to the monthly Short-Term Energy Outlook, written by the Energy Department's Energy Information Administration. Pump prices nationwide are expected to average US$1.42 a gallon by the end of the year, down 28 cents from the record monthly high of US$1.70 in May.
Natural gas demand in the US is projected to grow by 1.6 percent this year, though a larger 3.6 percent rise in production will help keep prices in check, the report said. Gas, currently trading at about US$3.18 per million British thermal units, is expected to average about US$3.30 this quarter and US$4.37 for the year. Gas storage injections rose to records from April through June to levels about 5 percent above the five-year average.
"There is enough gas around now," Costello said. "They could forgo injections for the next couple of weeks and even if demand shot up due to weather, there would be plenty." While demand from electric utilities during heat waves will increase competition for gas, "the likelihood of any significant summer jump in gas prices now seems remote," the report said.
Prices are down from a record US$10.10 per million Btu in December.
Gas production is expected to rise 2.9 percent in 2002, and while demand will jump 4.4 percent, high storage levels will help keep the average price next year at about US$3.40 per million Btu.
Electricity demand growth will slow to about 2.2 percent this year from growth of 3.7 percent last year because of the slowing economy, the report said. Industrial demand is expected to be lower than it was last year. Still, the summer is forecast to be warmer than normal, and that will boost electricity in the period from April to September by 1.9 percent from the same period last year
-- Martin Thompson (email@example.com), July 09, 2001
It's a molehill made out of a mountain. Here in Texas we've got oil running out of our ears. They don't call it Texas Tea for nothing.
-- Buck (firstname.lastname@example.org), July 09, 2001.
Big surprise that natural gas storage is running 5% ahead of the 5-year average. Last year at this time it was 25% behind. Where did it all come from? ???
It looks like it's a great example of how the free enterprise system works. Big demand, big prices, for a short while, will bring everybody and his cousin into the act to OVER-PRODUCE.
Ain't greed wonderful.
-- JackW (email@example.com), July 10, 2001.