# Presentation: 923036

## Crude & Natural Gas Outlook: More Tightness Ahead

**Guy Caruso**
**Administrator**
**Energy Information Administration**
**NPRA Annual Meeting**
**San Antonio, Texas**
**March 2004**

## Oil Price Variations & Level Increased Since Mid-1990’s

**Oil Price Variations & Level Increased Since Mid-1990’s**

**Sources: Reuters **

## Fundamentals Expected to Continue to Support Prices in Short Run

**Fundamentals Expected to Continue to Support Prices in Short Run**

**Sources: History, Reuters;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Annual U.S. & World Oil Demand Growth (1998-2005)

**Forecast**

**History**

**Sources: EIA, Short-Term Energy Outlook, March 2004.**

## Non OPEC Production Growth (1998-2005)

**Forecast**

**History**

**Sources: EIA, Short-Term Energy Outlook, March 2004.**

## OPEC Crude Oil Production (January 1998- est. April 2004)

**OPEC 10 Production**

**Quota (OPEC 10) **

**Iraq **

**Sources: History, EIA; Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Tight Fundamentals Reflected in Low World Inventories

**Tight Fundamentals Reflected in Low World Inventories**

**Source: International Energy Agency**

**Venezuela**

## U.S. Reflects World Market

**Sources: History, EIA;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## U.S. Gasoline and Distillate Inventories

**Sources: History, EIA;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Tight Product Markets Since 2000 Resulted in Margin Improvement Over 1990’s

**Gulf War**

**Source: Reuters annual average spot data for Gulf Coast **
**regular gasoline, No. 2, WTI**

## Margins Did Not Increase Smoothly Since 2000

**WTI**

**Gasoline**

**Jan 2000 – Feb 2004**

**Source: Reuters weekly average spot data for Gulf Coast **
**regular gasoline and WTI**

## Small Capacity Surplus in Summer Contributed to Gasoline Price Spikes

## 2004 Beginning with Tight U.S. Balance 

| Gasoline Balance Changes January & February*
(Thousand Barrels Per Day) |  |  |  |
| --- | --- | --- | --- |
|  | 2003 | 2004 | Change |
| Demand | 8497 | 8645 | 148 |
| Production 
(Excl Blending Comp Imports) | 7781 | 7966 | 185 |
| Finished Imports | 469 | 351 | -119 |
| Blending Comp. Imports | 260 | 318 | 59 |
| Stock Change | -50 | -77 | -27 |

*** U.S. estimates based on weekly data from end of December through end of February.**** **

## U.S. Finished Gasoline Demand

**U.S. Finished Gasoline Demand**

**Sources: History, EIA;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Gasoline Price Outlook 

**Regular Gasoline**

**Wholesale**
**Gasoline**

**Crude Oil **
**(WTI)**

**Sources: History, EIA & Reuters;  Projections, **
**Short-Term Energy Outlook, March 2004.**

## Summary Of Short-Term Petroleum Outlook

_***Crude Markets***_
**Growing world demand**
**Growing Non-OPEC supply**
**OPEC discipline**
**Inventories remain low**
**Prices stay around $30 per barrel**

_***Gasoline Market***_
**Low inventories ahead of summer**
**Uncertainty over availability of imports**
**Strong gasoline demand**
**Higher than average margins 2004**

## Like Crude Oil, Natural Gas Prices Increased in Recent Years

**Source: EIA, Reuters**

## U.S. Natural Gas Price Projection Reflects Recent Years’ Higher Prices

**Sources: History, Reuters;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Natural Gas Demand in 1990s Reflects A Shift to Slower Growth

**Forecast**

**Sources: History, EIA;  Projections, EIA **
**Short-Term Energy Outlook, March 2004.**

## Supply Changing: Surge in Rigs Shows Little Effect on Production

**Sources: History, EIA & Baker Hughes;  **
**Projections, Short-Term Energy Outlook, March 2004.**

## Shift in Long-Term Supply Perspectives Occurred

| Projections of Lower 48 
Natural Gas Production (TCF) |  |  |
| --- | --- | --- |
|  | 2010 | 2015 |
| AEO 1999 | 23.09 | 25.40 |
| AEO 2003 | 21.40 | 23.28 |
| AEO 2004 | 19.90 | 20.98 |
| NPC 1999 | 24.60 | 26.00 |
| NPC 2003 | 18.90 | 19.70 |

## LNG Imports Needed to Meet Demand 

**Source: EIA Annual Energy Outlook 2004.**

## LNG Growth Will Not Happen Immediately

***Potential Locations for LNG Regasification Terminals***

**Source: EIA**

## Summary of Short Term Natural Gas Outlook

**Demand growth and limited new supply expected to keep prices averaging over $5 per million Btu**
**LNG and new production may not grow substantially for several years**
**Could see price volatility in addition to higher level of prices during next few years**

## Conclusion

**Both oil and natural gas markets are expected to remain tight in the near term.**
**In 2004:**
**Crude prices are expected to remain near $30 in 2004;**
**Natural gas is expected to average over $5/MMBtu – raising refiners’ costs;**
**Product margins more like higher levels in 2000 and 2001 than those of the 1990’s.**