Operations

Short-Term Energy Outlook

Posted on February 2, 2005 by LCT Staff - Also by this author - About the author

WASHINGTON, D.C. - According to the Washington, D.C.-based Energy Information Administration (EIA), the projected average West Texas Intermediate (WTI) crude oil price for the first quarter of 2005 is about $43 per barrel, approximately $8 per barrel higher than in the first quarter of 2004, but $3 per barrel below the first quarter projection in the previous Outlook. WTI prices fell by $10 per barrel on average during the past two months due to the ongoing restoration of oil production in the Gulf of Mexico shut in due to Hurricane Ivan, unseasonably warm weather in the United States and rising U.S. and OECD commercial oil inventories in general. This Outlook extends the projection period through 2006. EIA’s initial assessment is that WTI prices are likely to remain in the $42-$43 per barrel range (on average) throughout 2005-2006.

World petroleum demand growth for 2005-2006 is projected to average about 2.1 million barrels per day, still strong growth but down from the 2.6 million barrels per day demand growth seen in 2004. Global economic growth is expected to settle at more sustainable rates over the next two years, tempered in part by high world oil prices. The lower global oil demand growth also reflects the fact that Chinese oil demand growth is expected to moderate from the very high rate seen in 2004, when a dramatic increase in demand for oil-generated power occurred. This source of demand is not expected to be nearly as important over the next two years. Because oil demand growth is expected to remain strong in 2005-2006, U.S. oil inventories and inventories in the other industrialized countries are not expected to show much growth from end-2004 levels. However, the record levels of production by OPEC countries in recent months have finally resulted in inventory builds in the OECD countries. Commercial inventories in these countries, which had been relatively low compared to historical standards, rose above the middle of the observed 5-year historical range. In addition, OPEC (and world) production capacity rose by a half million barrels per day to 1.1-1.6 million barrels per day above current output levels, as Saudi Arabia de-mothballed capacity at several fields. However, even with this action, the global capacity utilization rate remains near 99 percent.

The tsunami that struck South Asia on Dec. 26, while devastating and massive in scope, appears to have had minimal impact on oil markets or on energy markets generally. Global oil demand growth is likely to be the key factor for oil markets in 2005. While most analysts expect global oil demand growth to be significantly less than the 2.6 million barrels per day seen in 2004, markets will remain tight if it is close to the 2.0 million barrels per day EIA expects in 2005, a level that exceeds expected growth in non-OPEC supply and downstream refinery capacity. However, if world oil demand grows by less than 1.5 million barrels per day in 2005, as some analysts are expecting, oil markets could loosen up and the likelihood that prices could ease in 2005 would increase.

U.S. petroleum demand in 2005 is projected to average 20.9 million barrels per day, up 2.0 percent from the 2004 level. An additional 1.9-percent growth is anticipated for 2006. Motor gasoline demand is projected to rise 1.9 percent in 2005 and 2.4 percent in 2006, in line with highway travel growth. Jet fuel demand, buoyed by continued recovery in both capacity and utilization, is projected to climb 2.6 percent in 2005 and 1.9 percent in 2006. Distillate fuel oil demand, which has grown by about 4 percent per year for the last 2 years, is expected to grow more slowly in 2005 and 2006 at 2.5 percent and 1.3 percent, respectively, as industrial growth slows.

On January 10, 2005 , the U.S. monthly average pump price for regular gasoline was $1.79 per gallon, down 5 cents per gallon from one month ago. Recently, gasoline prices have been falling in response to lower crude oil prices. Additionally, the drop in spot gasoline prices reflects robust gasoline inventories, which are close to the upper end of their normal range for this time of year. Pump prices for regular gasoline are expected to average about $1.82 per gallon during the first quarter of 2005, up about 16 cents from Q1 2004 but down about 12 cents from Q4 2004. Continued growth in gasoline demand in the U.S. is expected to move average prices to about the mid-$1.90s by spring, about the same as in 2004. The improvement in current and expected gasoline supplies has reduced the likelihood of significant increases in average gasoline prices in 2005 compared to 2004.

View comments or post a comment on this story. (0 Comments)

More News

LiQMeng Pampers The Seating Plan

WebXclusive: The Taiwanese company provides upfit kits that will turn a regular ride into a luxurious experience.

All In A Day's Driving For Uber

TNC Travesties of the Week: Exploiting law loopholes, treating drivers like work machines, and more sexual assaults.

Tragic Accident Illustrates Need For Party Bus Rules

Analysis: Don’t let your client's night around the city turn into a horrific event. 

Tradition Trumps Hip For Luxury Brand Love

Many companies turn to storytelling to differentiate their products, however authenticity is crucial.

In A Troubled World, Remember Why People Travel

In pursuit of the foreign, we’re often shown by comparison how much of it we have here at home.

See More News

Facebook Comments ()

Comments (0)

Post a Comment

Submit

Blogs

See More

See More

See More

See More

LCT Store

LCT Magazine - December 2016 $12.95 GLOBAL/INTERNATIONAL ISSUE COVER STORY: * The Coolest Operators on the Planet * *



Connect

Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close