# Presentation: 524413

## Oil Market Outlook to 2010

**Guy Caruso**
**Administrator, Energy Information Administration**

***CERA Week - ******Oil Markets: Will the Supply Surge Arrive?***
** **
**February 7, 2006**
**Houston, Texas**

## Has a Supply Surge Already Begun?

***Has a Supply Surge Already Begun?***

- Available data suggest that oil demand has been growing rapidly over the past two years.
- Although markets were undoubtedly tight, supply volumes rose substantially to meet consumption and stock growth.
- Plus, many new projects are very likely to come on line in 2006 and 2007.
- In this sense, it seems that the supply surge has already started.

## What are Prospects for a Supply Surge by 2010?

***What are Prospects for a Supply Surge by 2010?***

**Supply Factors**
- New projects in the pipeline imply further capacity additions by 2010.
- While new projects are closely watched, decline rates in existing fields may be even more critical to the near-term supply picture.
- Investment future dependent on host of unpredictable variables.

## What are Prospects for a Supply Surge by 2010?

***What are Prospects for a Supply Surge by 2010?***

**Demand Factors**
- Consumption is highly sensitive to economic growth, which is subject to unpredictable short-term cycles unrelated to energy drivers.
- Possibility of increasing sensitivity of oil consumption to sustained high oil prices.
- Future demand for stock holding (both commercial and strategic) is subject to considerable uncertainty.

## World oil demand growth slowed in 2005: we expect it to increase through 2010

**Source: EIA. *****Short-term Energy Outlook*****, February 2006. *****Annual Energy Outlook*****, 2006.**

***World oil demand growth slowed in 2005: we expect it to increase through 2010***

## OPEC crude oil production capacity could grow 4-5 MMBD through 2010

***OPEC crude oil production capacity could grow 4-5 MMBD through 2010***

**Source: EIA internal estimates**

*** Iraqi capacity increases are highly uncertain because of political and security issues**

## Conventional Non-OPEC supply is expected to grow by over 2 MMBD through 2010

***Conventional Non-OPEC supply is expected to grow by over 2 MMBD through 2010***

**Source: EIA. *****Short-term Energy Outlook*****, February 2006 and  *****Annual Energy Outlook*****, 2006****.**

## Non-conventional oil output expected to grow over 2 MMBD through 2010

**Source: EIA.  *****Annual Energy Outlook,***** 2006**

## We expect global spare capacity to increase roughly 2-3  million barrels per day by 2010. This projection is  sensitive to both supply and demand developments. 
Continued supply growth depends on price levels and price volatility, maintaining new project schedules, net decline rates in existing OPEC and non-OPEC production, and political environments in places like Iran and Iraq.

Key demand uncertainties include economic growth rates, the sensitivity of consumption to sustained high prices, and net changes in stockholding.   

- Continued supply growth depends on price levels and price volatility, maintaining new project schedules, net decline rates in existing OPEC and non-OPEC production, and political environments in places like Iran and Iraq.
- Key demand uncertainties include economic growth rates, the sensitivity of consumption to sustained high prices, and net changes in stockholding.

***Conclusions***

## 
Short Term Energy Outlook, monthly 
Annual Energy Outlook 2006, December 2005, full report, February 2006 
International Energy Outlook, June 2005

available at: 

www.eia.doe.gov

*Short Term Energy Outlook*, monthly
*Annual Energy Outlook* 2006, December 2005, full report, February 2006
*International Energy Outlook*, June 2005
- available at:
**www.eia.doe.gov**

**Sources **