(EnergyAsia, May 25 2012, Friday) —The US EIA said it expects the world’s oil markets to remain tight in 2012 with demand growing to 88.88 million b/d and 90.04 million in 2013, up from last year’s 87.92 million b/d.
In the near term, it sees fundamentals easing slightly since mid-March, oil supply growth to exceed demand growth while global commercial stocks continue to build following the significant draws during 2011.
But, the agency said it does not expect these large counter‐seasonal stockbuilds to continue throughout the year, and both global oil inventory and spare production capacity levels are projected to be tight enough to support higher average crude oil prices in 2012 than in the previous year.
Crude oil prices have declined after increasing through mid‐March, as global liquids supply outpaced consumption by 600,000 b/d in the first quarter, which led to the inventory builds.
The EIA said several uncertainties continue to weigh on oil prices: supply disruptions in non-OPEC countries, the impact of impending European Union embargo and sanctions targeting Iranian crude oil exports, the Eurozone crisis, and expectations for slower global economic growth.
In its latest short-term outlook, the EIA said it expects world liquid fuels consumption to grow by one million b/d in 2012 and 1.2 million b/d next year, up from 800,000 b/d in 2011.
Oil demand growth in China, the Middle East, Central and South America, and other developing countries will more than offset the projected 400,000 b/d in decline in Organisation for Economic Cooperation and Development (OECD) consumption this year.
EIA expects non‐OPEC crude oil and liquid fuels production to rise by 700,000 b/d in 2012 and by a further 1.1 million b/d in 2013. North America will account for the bulk of non‐OPEC growth, with projected production increases of 680,000 b/d in 2012 and 260,000 b/d in 2013. The growth will come from US onshore shale and other tight oil formations and Canadian oil sands.
EIA sees Brazil’s output, mostly from its offshore pre-salt oilfields, rising annually by 130,000 b/d over the next two years. Boosted by the start-up of its Kashagan field next year, Kazakhstan will increase its total production by 160,000 b/d in 2013.
Production increases in China and Colombia will offset declines in Mexico and the North Sea.
EIA expects OPEC to produce slightly over 30 million b/d of crude oil over the next two years to accommodate the projected increase in world oil demand and to counterbalance supply disruptions. It expects OPEC production to rise by one million b/d in 2012 and decline by 300,000 b/d in 2013.
The agency expects Iran’s crude production to fall by about 500,000 b/d by end-2012 and by another 200,000 b/d in 2013, from 3.55 million b/d at the end of 2011.
“Iran’s output decline began to accelerate during the last quarter of 2011 and has continued. A number of foreign companies investing in Iran’s upstream have halted their activities as a result of previous sanctions that have made it difficult to do business with the country,” said the EIA which expects the loss of Iranian oil will be offset by increased production in other OPEC member countries.
EIA said it has lowered its forecast 2012 average US refiner acquisition cost of crude oil by $2.50 per barrel from its April outlook to US$110 per barrel, still about $8 per barrel higher than last year’s average price.
It sees WTI crude oil price averaging US$104 per barrel in 2012, about US$2 per barrel lower than its previous forecast, but US$9 higher than the 2011 average. The 2013 price will remain flat, with WTI and the US refiner acquisition cost averaging US$104 and $108, respectively.