Oil markets will continue to tighten over the next two years given expected robust growth in world oil demand and slow growth in supply from non-OPEC countries, the U.S. Energy Information Administration (EIA) said Tuesday.
The tightened markets and slow supply growth will result in an expected drawdown of global petroleum stocks and a call for increasing production from OPEC member countries, which will reduce surplus crude oil production capacity at a time when the disruption of crude oil exports from Libya and continuing unrest in other Middle East and North African countries already highlight significant supply risks, the agency said in a monthly report.
In order to meet projected demand growth, the market will rely on both a drawdown of inventories and significant increases in the production of crude oil and non-crude liquids in OPEC member countries, the EIA said.
World crude oil and liquid fuels consumption grew by an estimated 2.3 million bbl/d in 2010 to a record-high level of 86.7 million bbl/d. The EIA expected that world liquid fuels consumption will grow by 1.5 million bbl/d in 2011 and by an additional 1.6 million bbl/d in 2012.
The rise in crude oil prices is reflected in higher petroleum product prices, said the EIA, which forecast that the annual average regular retail gasoline price will increase from 2.78 dollars per gallon in 2010 to 3.70 dollars per gallon in 2011 and to 3.80 dollars per gallon in 2012.
Natural gas working inventories ended March 2011 at 1.6 trillion cubic feet, slightly below the 2010 end-of-March level, according to the EIA. It expected that working gas inventories will remain relatively high throughout 2011 and that the natural gas market will begin to tighten in 2012.
The EIA predicted that West Texas Intermediate (WTI) crude oil spot prices average 106 dollars in 2011 and 114 dollars per barrel in 2012, increases of 5 dollars per barrel and 9 dollars per barrel, respectively, from last month’s outlook.