Tuesday, July 12, 2005

Short Term Energy Outlook is still bullish on oil

The latest edition of Short Term Energy Outlook from EIA suggests that we may have to get used to 60 dollars a barrel price for crude, and $2.30 a gallon for gasoline. Excerpts:
...Monthly average WTI prices are projected to remain above $55 per barrel for the rest of 2005 and 2006. ...Crude oil prices are expected to remain high enough to keep quarterly average gasoline prices above $2.20 per gallon through 2006.
... First, worldwide petroleum demand growth is projected to remain robust during 2005 and 2006, although not as strong as in 2004. Second, production growth in countries outside of the Organization of Petroleum Exporting Countries (OPEC) is not expected to accommodate incremental worldwide demand growth. Another factor that could influence the U.S. oil market over the next few months is the severity and location of hurricanes.
...High levels of production from OPEC members contributed to inventory builds in the OECD countries in the first half of this year, with these stocks moving towards the upper end of the 5-year historical range. However, OECD stocks have not grown in terms of days supply (the number of days that inventories would satisfy demand) because demand has grown rapidly as well.

On the hurricane front, GreenCarCongress points out the damage done to BP/Exxon Thunder Horse project due to Hurricane Dennis. The Thunder horse project, which was supposed to start production at the end of this year, will have an ultimate capacity of 250,000 barrels of oil per day.

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