# Presentation: 669107

## Petroleum Outlook 2002:On the Road to Pamplona

**John Cook**
**Energy Information Administration**
**NPRA Annual Meeting**
**San Antonio, Texas**
**March 18, 2002**

**Notes:**
Last year it was my pleasure to attend this breakfast meeting and discuss with you the topic of oil price volatility.  

Today I will describe the changes that have taken place since then, and where we are going.

As my title might suggest, our outlook is somewhat “bullish.”

## Introduction

**Global Demand (How Much Oil Are We Using?)**
**Global Supply**
- OPEC 10 vs. Iraq vs. non-OPEC
**Inventories:  The Intersection of Demand and Supply**
- Implied Global Inventory Change
- Observed OECD Inventories
- U.S. Inventories
**WTI Price Outlook**
**U.S. Gasoline Outlook**
**U.S. Distillate Fuel Outlook**
**U.S. Jet Fuel Outlook**

**Notes:**
I will start by looking at world demand, paying particular attention to the uncertainty surrounding how much oil we use every day.  Various private industry think tanks have their own estimates of global demand, which can vary by as 600,000 barrels per day, even for data as far back as 2000.

I will then look at the global supply picture, emphasizing the impact OPEC’s latest cut in quotas will have on the market this year.  I’ll then compare OPEC10 supply with that of Iraqi and non-OPEC supply to show how each of these have changed in the last 10 years.

As the intersection of global demand and supply, inventories provide a snapshot of the current balance between supply and demand.  First, I’ll look at the implied inventory change, i.e. the difference between global supply and demand.  Since inventories outside the OECD are either derived from rule-of-thumb measures or at best educated guesses, I’ll then look at OECD inventories, for the most part the only ones measured on a somewhat reliable basis.  I’ll then turn to the best measured set of petroleum inventories, those of the United States (since I’m responsible for them!).

We’ll then see how all this ties together to provide our outlook for West Texas Intermediate (WTI) crude oil, the benchmark U.S. crude oil.

We’ll finish by looking more closely at the upcoming U.S. gasoline market, followed by a brief glance at the distillate fuel and jet fuel outlooks for 2002.

## Crude Price Cycles: Where is the Next Turn?

**Crude Price Cycles: Where is the Next Turn?**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Crude oil prices have seen very large swings over the last few years:

 the downslide starting in 1997

 the subsequent upturn that peaked in late 2000

 then the slide last year, capped by a sharper decline following 9/11, which seemed to be largely the result of pessimism about global demand growth and the economy.

We’ve seen crude prices turn upward in recent weeks, probably indicating a change in the “cycle.”

The question we all are struggling with is,  “Where to from here?”  Will prices continue upward?  Or will we see them level for a while or even turn downward again soon?

## Crude Oil Prices Expected to Rise Through 2002

**Crude Oil Prices Expected to Rise Through 2002**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
EIA’s current forecast, as shown in our Short-Term Energy Outlook, calls for crude oil prices to rise through the remainder of this year, taking West Texas Intermediate (WTI) spot prices to about $25 per barrel.  We actually neared that level last week, so if prices remain there, the next forecast (in early April) will reflect an even higher path.

Until recently, daily prices had been below our forecast, making it difficult for some to believe that EIA expected prices to increase this year as demand recovers at the same time OPEC is cutting back production yet again.  

## Supply
Non-OPEC Supply
OPEC 10 Crude Oil Production Volumes
Iraq
Retroactive Pricing
UN Revisions to Oil-for-Food Program
Upcoming Confrontation?
Nigeria
Venezuela

Demand
Weather
Global Economic Recovery
Lingering Impacts from 9/11 
When, Not If, Crude Oil Prices Will Reach $25 per barrel
	and higher

**Non-OPEC Supply**
**OPEC 10 Crude Oil Production Volumes**
**Iraq**
**Retroactive Pricing**
**UN Revisions to Oil-for-Food Program**
**Upcoming Confrontation?**
**Nigeria**
**Venezuela**
**Demand**
**Weather**
**Global Economic Recovery**
**Lingering Impacts from 9/11**** **
**When, Not If, Crude Oil Prices Will Reach $25 per barrel**
**	****and**** higher**

**Uncertainties**

**Notes:**
Oil price forecasts are always subject to a number of influences, but the level of uncertainty varies with market fundamentals and world events, and this year has a number of uncertainties that will help to determine the future of oil markets.

Among the many factors incorporated in our outlook (and which could result in a price path significantly higher or lower than forecast) are those listed here.

## What Is Global Demand or Supply?

| Demand | 2000 | 2001 | 2002 |
| --- | --- | --- | --- |
| PEL | 76.2 | 76.1 | 76.2 |
| PIRA | 76.6 | 76.8 | 77.6 |
| Argus | 76.3 | 76.3 | 76.6 |
| Deutsche Bank | 76.0 | 75.9 | 76.5 |
|  |  |  |  |
| Supply | 2000 | 2001 | 2002 |
| PEL | 76.8 | 76.7 | 76.4 |
| PIRA | 77.4 | 77.2 | 77.2 |
| Argus | 76.6 | 76.4 | 74.9* |
| Deutsche Bank | 76.8 | 76.8 | 77.2 |

- *  Assumes OPEC 10 production remains 1 MMBD below Dec. 2001 for all 2002.

**Notes:**
With a market as global, and vital, as that for petroleum, there is no shortage of analysts making assessments of world supply and demand fundamentals.

And because of the lack of definitive statistics for many countries, particularly outside the OECD, there is disagreement even about historical supply and demand levels, much less forecasts.

This table shows actual and forecast global supply and demand totals from four of the most-respected assessments, aside from EIA’s own data.

## WTI Crude Oil Price: Potential for Volatility Around Base Case

**WTI Crude Oil Price: Potential for Volatility Around Base Case**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
While the forecast could be correct on average, wide swings may occur around the baseline, as illustrated with the red bands.

The fundamentals behind our forecast see inventories returning to normal or even below-normal levels, resulting in WTI prices increasing to $25 per barrel or higher sometime this year.  But, as discussed, both supply and demand projections are subject to more than enough uncertainty to swing prices $5 per barrel or more above or below the base case.

## Annual World Oil Demand Growth1991-2002

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Expected demand growth is a key component to EIA’s view that the petroleum market likely will tighten in 2002.   

EIA’s demand projection for 2002 shows increased growth, though not nearly as much as was experienced in the 1990s.  

Global demand is expected to increase by 0.6 million barrels per day in 2002.  This follows growth of only 0.03 million barrels per day in 2001.

## Quarterly World Oil Demand GrowthFrom Previous Year

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**2000**

**2001**

**2002**

**Notes:**
As this graph shows, on a quarterly basis, global oil demand is only expected to remain weak through the first half of this year.  As the world economy recovers in the second half, so too will global oil demand.

Note that some of the seemingly erratic year-to-year demand changes seen here result from unusual circumstances largely impacting the winter (fourth and first) quarters. 

A portion of would-be demand from the first quarter 2000 shifted to the fourth quarter 1999 due to Y2K concerns.

 This, in turn, makes fourth quarter 2000 and first quarter 2001 growth look smaller and larger, respectively, than it otherwise would.

 Fourth quarter 2001 demand was driven lower by economic weakness, 9/11 aftereffects, and mild weather.

These factors will dissipate as the year progresses.

## Annual World Oil Demand Growthby Region, 1991-2002

*** Other includes Australia, New Zealand, the Middle East, and Africa.**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Of the increase expected in 2002, almost all of it comes from increases in the Americas and Asia. 

Demand in Asia grew steadily during most of the 1990s, with the 1991-1997 average growth per year at just above 0.8 million barrels per day.  However, in 1998, demand dropped by 0.2 million barrels per day as a result of the Asian economic crisis that year. In 1999 and 2000, growth in oil demand rebounded, but then remained flat in 2001, as the U.S. recession impacted Asia as well.

In the Americas, oil demand growth was strong throughout almost all of the last decade.  However, oil demand in the Americas declined in 2001, as the US recession impacted oil demand.  But the Americas are once again expected to grow by nearly 0.2 million barrels per day in 2002.

In the Former Soviet Union, oil demand plummeted during most of the 1990s, with demand decreasing yearly by an average of 0.6 million barrels per day during 1991-1997. In the past few years, demand seems to have flattened, with 2002 expected to show the first increase since before the collapse of the Soviet Union.

Demand growth in Europe averaged 0.2 - 0.3 million barrels per day from 1991 through 1998.  However, oil demand growth dipped significantly in 1999 before flattening in 2000.  Oil demand in Europe grew slightly in 2001 and is expected to remain relatively flat in 2002. 

## U.S. Petroleum Demand in 2nd Half of 2002 Expected to be Higher than in 2001

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Economic weakness, the events of September 11, and an unusually warm winter explain much of the negative year-to-year demand growth for most of last year, a trend which is expected to persist through this spring.

However, economic recovery and a presumed return to normal seasonal temperatures next fall are expected to result in a resumption of year-to-year demand growth in the second half of this year.

## Distillate Fuel and Residual Fuel Demand vs. Spot Natural Gas Wellhead Price

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
One of the factors influencing U.S. petroleum demand this winter, as compared to the previous year, was the return of natural gas prices to more typical levels from the high prices seen in the winter of 2000-2001.

When natural gas prices are unusually high, utility and industrial customers who have the ability to switch to another fuel, such as distillate or residual fuel oil, have the incentive to do so.  Such was apparently the case in the previous two winters.

This past winter, with natural gas prices at more typical seasonal levels, this incremental petroleum demand was not present, resulting in much lower demand on a year-to-year basis.

As this chart shows, there is a very visible correlation between the year-to-year fluctuations in natural gas prices and those in distillate and residual fuel demand.

## Will OPEC Keep Production Down in 2002?

**History**

**Projections**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
A major supply factor pointing towards a tightening petroleum market in 2002 is OPEC production. EIA expects that by the 2nd quarter of 2002, OPEC 10 crude oil production will be over 4 million barrels per day less than in the 4th quarter of 2000.

With a background of weakening demand from weakening economies, OPEC has responded by cutting production quotas by a total of 5 million barrels per day in 2001 and 2002.

The last of these cuts began to impact the United States by the middle of February.  

With the effect of the most recent OPEC production cut just beginning, U.S. crude oil stocks are likely to be drawn down and the U.S. crude market will likely tighten.  With less crude oil available, prices will increase and economics will cause refiners to rely more heavily on crude oil and product inventories.

EIA is also forecasting enough demand increase over the year, that under these circumstances, we would expect OPEC to increase production in the 2nd half of the year.

If OPEC does not increase production in the second half, as their rhetoric indicates, prices will likely rise much further and faster.  

## Changes in Demand and Supplyfrom 1992 to 2002

*** Other includes all non-OPEC supply and OPEC non-crude production.**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**OPEC 10**

**Iraq**

**Other**

**Demand**

**Notes:**
This chart shows the sources of new supply that have been tapped to fulfill the increase in world oil demand over the last ten years, amounting to a little over 9 million barrels per day.

Perhaps the most surprising aspect of this chart is what you don’t see – that is, any significant increase in OPEC crude oil production, with the exception of Iraq, which is not bound by the cartel’s quota system.

Increases in Iraqi production have accounted for about 2 million barrels per day over this period, while the remainder has come from a combination of non-OPEC production, and OPEC non-crude oil production.

## EIA’s World Petroleum Balance 

**Source: Energy Information Administration, March 2002.**

**Notes:**
As we look more closely at seasonal patterns in supply and demand we see the interruption in the general seasonal swings between supply and demand beginning in 1997.   The long period of supply excess was followed by the slowdown in demand and supply and the period of supply underage, which was followed again by excess supply in 2001. 

## Implied Global Stock ChangeFrom End-1999 Through End-2002

**Source: Energy Information Administration, March 2002.**

**Notes:**
Looking at it another way, based on the global supply/demand balance, inventories fell dramatically at the end of 1999 (partly due to Y2K concerns).

While global stocks did not draw as much as normal in the first quarter of 2000, the builds in the second and third quarters averaged a normal build, so that entering the fourth quarter of 2000, stocks were the same relative to normal as they had ended the first quarter.

Stock builds in the fourth quarter of 2000 and the first quarter of 2001 built inventories relative to normal, but smaller-than-normal builds in the second and third quarters brought stocks back in line with normal levels.

Stock draws in the fourth quarter of 2001 and the first quarter of 2002 have been about normal, so expected smaller-than-normal builds in the second and third quarters would create a tighter market.

## OPEC Discipline & Economic Recovery Tighten World Balance in 2002

***Total includes commercial and government stocks.**

**Source: Energy Information Administration, March 2002.**

**Notes:**
OECD data is not particularly current, but it appears that inventories in early 2002 have returned to more normal levels.  As we shall see, U.S. inventories seem more bloated than other OECD regions.  While the U.S. saw stock builds in 2001, by the end of the year, both Europe and Japan were experiencing year-on-year declines.

 In total, by the end of 2001, the market seemed fairly well balanced.  

But EIA sees the supply-demand balance tightening again this year with inventories slipping below normal levels.  But there are at least two large uncertainties: OPEC’s ability to restrain production, and the timing of the world economic recovery.      

Even assuming Iraqi oil exports are not disrupted at the end of May as the current UN oil-for-food phase ends, OPEC is going to need to increase its oil production to account for demand increases over the 2nd half of the year to prevent stocks from falling further.  However, with uncertainty surrounding how long Iraq might withhold its exports under the United Nations' oil-for-food program, it is imperative that OPEC does not initiate any additional cuts, and even goes ahead and increases production later this year.  The “alternate forecast” line in this chart shows the impact on OECD stocks if OPEC does not increase production in the second half of the year.

EIA’s forecast of a low stock cushion implies we should see higher crude oil prices before the year is out.  

## Fundamentals Support Cycle Turning in 2002

**Fundamentals Support Cycle Turning in 2002**

**Source: Energy Information Administration, March 2002; International Energy Agency.**

**Notes:**
The impact on crude oil prices of the OECD supply/demand balance shown on the prior slide can be quantified.  EIA analysts have modeled this relationship, and have found it to be quite useful in forecasting crude oil price trends.  This chart shows the results of this relationship. 

The graph shows the model as it begins predicting prices in 1992.  It shows how well the model has predicted not only the direction, but the magnitude, of prices over this 10 year period.

 While the model is simple and not perfect, it does predict the overall trends, as can be seen by the expected declining price path that occurred last year.

 It also shows that prices may have over-shot the fundamental balance at the end of 2001 -- at least partially due to speculative concerns over September 11, global demand growth, and the economy.  The market may also be putting undue weight on the U.S. fundamental supply-demand balance.  

 While prices diverge somewhat from the model results in any given month, they seem to drift back to where the fundamental supply/demand balance says they will likely be, which as the model estimates, appears to be a return to $25 per barrel oil if our forecast of OECD supply and demand is what occurs.

## U.S. Commercial Petroleum InventoriesBuilt More Than In Other Regions in 2001

**U.S. Commercial Petroleum Inventories****Built More Than In Other Regions in 2001**

**Source: International Energy Agency, Oil Market Report database, February 2002.**

**Notes:**
While the U.S. follows world patterns, no region always moves in lockstep with the rest of the world.  As I stated earlier, the U.S. seems to have experienced a larger stock build than other OECD regions in 2001.

Whereas the U.S., OECD Europe and OECD Asia were showing significant inventory growth in the 1st half of 2001, towards the latter half of 2002 (especially the latter part of the year), increases in inventories over year-ago levels were mostly in North America (primarily the United States).

This point is important because prices in the very short term can be influenced by U.S. statistics, which are published on a weekly basis.  The short-term focus of daily prices can miss the longer-term drivers that may be pointing in a different direction.

## U.S. Crude Oil and Gasoline Market Cycles

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Both crude oil and products have shown similar trends, although sometimes one lags or leads the other slightly.

As of last week (March 8), 
crude oil inventories are about 5% above their 5-year average for this time of year
Gasoline stocks are less than 1% above average
Distillate inventories are about 9% above average.

## The Cycle of Refinery Inputs, Inventory Balance,  and Margins

**Crude Inputs High Stocks Low **
***(Summer 2001)***

**Crude Inputs Decreasing**
***(Late Winter 2001/02)***

**Product Stocks Increasing**
***(Fall 2001)***

**Refinery Margins Weakening**
***(Early Winter 2001/02)***

**Refinery Margins Increasing**
***(Late Summer 2002)***

**Excess Stocks Diminishing**
***(Spring 2002)***

**Notes:**
As we look ahead to U.S. product markets, the cycle ahead could unfold similarly to what is shown on this slide. 

Beginning in the Summer of 2001,  low inventories and high refinery margins created incentives for increased crude inputs.   The increased production along with a slowing demand growth began causing inventories to build and margins to erode.

After September 11, the balance became even looser.  With jet demand plummeting and refiners shifting jet mainly into distillate, distillate inventories showed a strong build.  Warm weather and continuing jet demand weakness kept distillate spreads down and inventories high.  Gasoline inventories also built and gasoline spreads dropped.  

Refiners may have begun responding to the declining margins and overabundance of product inventories by decreasing crude inputs into refineries.

Depending on maintenance schedules and the degree of run cuts, we could begin to see excess inventories erode.  We expect to see this occur soon.  

The remainder of the slides show the demand and supply factors combining to create this cycle.  

## Margins Have Begun Their Seasonal Climb

**Source: Reuters, EIA**

**Notes:**
The supply-demand balance may result in refinery margins nearer to the average over the past 5 years (shown as the blue area) than those seen the last two years.

During 2000 and 2001, much of the margin activity occurred in the spring, when gasoline markets are usually at their tightest at the refinery level.

This spring, the petroleum balance worldwide, and in the U.S. in particular, is likely to tighten.  As a result, we could see  the kind of spring run-up seen during the last two years, albeit starting from a much lower price level.   (Regional imbalances are still possible, however, and could cause some margin action.) 

## Crude Oil Inputs Ended 2001 at “Normal” Levels; Dec. 2000 Was Unusually High

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Particularly in December 2001, there were some who used a reduction in crude oil inputs to refineries as evidence that the oil market was bearish; that oil demand was weak.  The only way to conclude this is to compare it to December 2000 levels.  But in fact, it was the December 2000 levels that were unusually high, as high product prices and low product stock levels encourage increased refinery production.

However, as this chart shows, crude oil inputs typically decline some in December, and the amount run through refineries in December 2001 was not low, and in fact may have been considered high under the circumstances of low margins and high product inventories!

## Gasoline Yields Much HigherThan Usual in 2002

**Source: Reuters**

**Notes:**
Refinery output of any petroleum product is a function both of refinery run cuts, as seen in the previous slide, and the yield of that product.

Product yields tend to vary seasonally, due both to demand patterns and shifting specifications, especially for gasoline.

(This chart shows a “simple” gasoline yield, i.e. total gasoline production as a percentage of gross refinery inputs.)

As shown here, EIA expects relatively high gasoline yields throughout 2002.

## Record Gasoline Production Likely Throughout 2002

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Despite lower refinery runs in January and February this year than last, gasoline yields have been kept higher, presumably because of relatively lower demand and higher stocks for distillates.  This has resulted in estimated gasoline production at record levels for this time of the year.

For March through May, we expect gasoline production to match or exceed last year’s record levels for those months.

As the summer driving season proceeds, gasoline production will need to remain relatively high, due to expected strong demand and relatively low inventory levels. 

## Finished Gasoline Net ImportsThis Spring/Summer Less Than 1 Year Ago

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
With refinery utilization and gasoline production at record or near-record levels, gasoline imports have been an increasingly important source of incremental supply in recent years.

So far this year, finished gasoline net imports by month have about equaled the average of the past two years.  (Imports of gasoline blending components, not shown here, have behaved similarly.)

EIA’s forecast calls for gasoline imports to continue at or near typical recent-year levels throughout 2002.

## Gasoline Demand Growth Continues

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Gasoline demand growth will contribute to the tightening market along with other products.  Demand growth in 2000 and 2001 was not strong, averaging less than 1 percent since 1999.  

However, demand is expected to grow over 2 percent in 2002 as the economy turns around.

## With Precarious Balance, Higher Demand Would Rapidly Draw Stocks

**With Precarious Balance, Higher Demand Would Rapidly Draw Stocks**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
In fact, the rate of demand growth is a significant uncertainty in EIA’s gasoline forecast for this summer.  Depending on the speed of economic recovery and consumer preference for different vacation travel modes, gasoline demand could conceivably be one or two percent higher than currently expected.

This chart shows the impact of gasoline demand 2 percent higher than the base forecast for this summer.  Note that this relatively small incremental demand, if not met by higher production or imports,  would draw stocks down fairly rapidly.

In actuality, we would not expect this scenario to prevail for long.  If demand were to reach this level, upward price pressures would be expected to bring a response in terms of both production and imports, easing the market balance.

However, areas using RFG, and particularly California (CARB RFG) and the Chicago/Milwaukee area (ethanol RFG) cannot be readily relieved using imports, and thus are more prone to problems when supplies are tight.

## Retail Motor Gasoline Prices Will Rise, But Should Remain Below Recent Summers

- * Regular self-service

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
To complete the U.S. gasoline picture, retail prices this summer will follow the direction of crude oil prices.

But with both crude oil prices and margins lower than last year, retail prices will also peak at a lower level than the last two summers.

## U.S. Distillate Inventories Will Remain High 

**U.S. Distillate Inventories Will Remain High **

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002.**

**Notes:**
Although today’s discussion is focused on the approaching driving season, I’d like to take a brief look at the outlook for other products as well.

Inventories of distillate fuels, including diesel fuel and heating oil, are near the top of their typical seasonal range, helped by one of the warmest winters on record.

The need to run refineries at high rates to produce gasoline will ensure strong co-production of distillates.

## Jet Fuel Demand Recovering Slowly

**Jet Fuel Demand Recovering Slowly**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, March 2002, and September 2001.**

**Notes:**
For jet fuel, the biggest factor since September 11 has been the sharp drop in air travel, which of course has significantly reduced jet fuel demand.

This slide shows how domestic production and net imports of jet fuel compare, on a monthly basis, to U.S. demand.  The difference between the top of the bars and the line representing demand is a stock build or draw.

Year-to-year demand growth was very strong in most of 2000 and early 2001, but we saw declines last April, July, and August, even before the events of September 11.  This was seen as the leading edge of the economic weakness that accelerated in the fourth quarter.

The combination of this economic weakness and aftershocks from the terrorist attacks yielded a significant setback from average annual growth of about 2.5 percent over the previous 5 years.  The dashed line is EIA’s September 2001 demand forecast, issued a week before the attacks.  As you can see, demand for the remainder of 2001 averaged more than 250 thousand barrels per day below that forecast, which we think will drop to about 150 thousand barrels per day in the last half of this year.

Perhaps the most important question is how quickly aviation demand will recover as economic activity returns to long-term growth.

## Conclusions

**World oil prices are expected to continue upward through 2002**
- Global economic recovery
- OPEC output cuts
- Declining inventories
**U.S. market conditions likely to vary by product**
- Gasoline supply balance will be tight, prices strong
- Distillate and jet fuel supplies will be adequate
**However, there are a number of uncertainties**
- Speed of demand recovery
- OPEC response to rising prices