Crude Oil Prices High But May Relax Some By Year’s End
Sources: History: EIA; Projections: Short-Term Energy Outlook, June 2000.
Notes:
- Current WTI prices over $30 per barrel reflect uncertainties in supply, on top of inventories that are still low, despite some recent improvements.
- World oil prices are expected to show a gradual decline as increased oil production from OPEC and others enters the world oil market, although the actual path may not be as smooth as that shown on the graph. The average price of WTI was almost $30 per barrel in March, but dropped to $26 in April as the market responded to the additional OPEC production. However, prices strengthened again and recently have been staying over $32, as growing gasoline production needs pull on the crude market in the face of low crude oil and gasoline stocks. EIA expects adequate OPEC supplies to be introduced into the market throughout the rest of the year to bring WTI crude oil price down somewhat by year end.
- These crude oil price projections reflect:
- Fairly low world demand growth during 2000 of 1.7 percent, or 1.3 million barrels per day.
- Non OPEC production growth during 2000 of over 1.2 million barrels per day.
- Growth in Iraqi production of 700 thousand barrels per day from Q1 to Q4 2000. Iraqi production is estimated at 3.0 million barrels per day in the fourth quarter 2000.
- Growing OPEC leakage over the current OPEC target.