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Global Crude Oil and Liquid
Fuels
Crude Oil and Liquid Fuels
Overview. The world oil
market is largely unchanged from recent
Outlooks. World oil prices will rise
slowly as an expected renewal of global economic
growth leads to higher world oil demand and
members of the Organization of the Petroleum
Exporting Countries (OPEC) continue their
support of prices near current levels.
Global Crude Oil and Liquid Fuels
Consumption. World oil
consumption to grow by about 1.5 million bbl/d
in both 2010 and 2011, mostly unchanged from
last month’s Outlook. However,
estimates for oil consumption in 2009 were
revised upwards, with these changes carried
through the forecast period. Consequently, the
level of forecasted demand in 2010 and 2011 is
higher than last month’s Outlook.
Countries outside of the Organization for
Economic Cooperation and Development (OECD)
represent nearly all of the expected growth in
world oil consumption, led by China, Saudi
Arabia, and Brazil (World
Liquid Fuels Consumption Chart).
Non-OPEC Supply.
Revised its forecast of non-OPEC supply upwards
from the last Outlook, with non-OPEC
supply now expected to increase by 0.6 million
bbl/d in 2010 and decline by less than 0.1
million bbl/d in 2011. The forecast for oil
production in Mexico is more optimistic than
last month. Data for the first half of the year
have been higher than expected, as recent
decline rates at the Cantarell field have fallen
and the country has boosted output from other
offshore areas. Nonetheless, oil production in
Mexico is still expected to fall by 0.1 million
bbl/d in 2010 and roughly 0.2 million bbl/d in
2011. Over the forecast period, Brazil, the
United States, and Azerbaijan should provide the
largest sources of non-OPEC supply growth.
OPEC Supply.
The 12 members of OPEC produced an estimated
29.4 million bbl/d of crude oil in the second
quarter of 2010. After remaining relatively
steady for the past four quarters, OPEC
crude oil production is expected to rise
slightly through 2011 to accommodate increasing
world oil consumption and maintain the
organization’s market objectives. Even with the
increase in crude oil production, OPEC surplus
capacity should remain over 5 million bbl/d in
2010 and 2011, versus 4.3 million bbl/d in 2009
and 1.5 million bbl/d in 2008 (OPEC
Surplus Crude Oil Production Capacity Chart).
OPEC production of non-crude petroleum liquids,
which are not subject to OPEC production
targets, are expected to increase by 0.6 million
bbl/d in 2010 and 0.7 million bbl/d in 2011.
OECD Petroleum Inventories.
Commercial oil inventories held in the OECD
stood at about 2.7 billion barrels at the end of
the first quarter of 2010, equivalent to about
57 days of forward cover, and roughly 67 million
barrels more than the 5-year average for the
corresponding time of year (Days
of Supply of OECD Commercial Stocks Chart).
The level of OECD oil inventories is expected to
decline through the forecast period, though
days-forward-cover should remain high due to
falling OECD oil consumption.
Crude Oil Prices.
WTI crude oil spot prices averaged $75.34 per
barrel in June 2010 ($1.60 per barrel above the
prior month’s average), close to the $76 per
barrel projected in the forecast in last month’s
Outlook. We expect WTI prices
will average about $79 per barrel over the
second half of this year and rise to $84 by the
end of next year (West Texas
Intermediate Crude Oil Price Chart).
Energy price forecasts are highly uncertain,
as history has shown (Energy
Price Volatility and Forecast Uncertainty).
WTI futures for September 2010 delivery for the
5-day period ending July 1 averaged $77 per
barrel, and implied volatility averaged 35
percent. This made the lower and upper
limits of the 95-percent confidence interval $60
and $98 per barrel, respectively.
Last year at this time, WTI for September
2009 delivery averaged $70 per barrel, and
implied volatility averaged 44 percent,
rendering the limits of the 95-percent
confidence interval $52 and $95 per barrel. |
