MARKET WATCH: Oil prices rise on IEA demand forecast

Crude oil prices rose on the New York and London markets Apr. 14 for a fourth consecutive day after the International Energy Agency forecast oil demand will rise by 1.1 million b/d this year compared with 2014 demand growth of 700,000 b/d.

Yet, the statistics-monitoring group in Paris warned in its Oil Market Report for April that the world oil market outlook is unclear, saying a market rebalancing likely is in its early stages.

“In some ways, the outlook is only getting murkier,” IEA said. “That’s in part because the backdrop against which the adjustment is playing out is constantly changing.”

One question is how quickly a preliminary agreement between Iran and other countries regarding Iran’s nuclear program might be finalized. If sanctions are removed, Iran could start exporting more oil although analysts have said that likely would not happen anytime soon.

In the latest monthly report, IEA raised its forecast for 2015 global oil demand by 90,000 b/d to 93.6 million b/d, citing cold first-quarter temperatures and a steadily improving global economic backdrop.

Also on Apr. 14, the US Energy Information Administration released its Annual Energy Outlook for 2015 (AEO2015), saying that continued strong growth in US crude oil production from tight formations is expected to lead to a decline in net imports of crude oil and petroleum products (OGJ Online, Apr. 15, 2015).

The AEO2015 reference case calls for US imports and exports to be balanced starting in 2028. EIA listed various scenarios such as high oil price and high oil and gas resource cases, in which the US becomes a net exporter in 2019. In the low oil price case, the US remains a net importer through 2040.

For this year, US oil production will increase in 2015 vs. 2014, AEO2015 said, adding the US produced 9.4 million b/d as of Apr. 3, which was 14% more than last year. AEO2015 forecasts US production could peak at 10.6 million b/d in 2020 and fall to 9.4 million b/d in 2040.

US oil supplies increase

EIA estimated US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased 1.3 million bbl for the week ended Apr. 10 compared with the previous week. At 483.7 million bbl, crude oil inventories are at the highest level for this time of year in at least the last 80 years, the weekly petroleum status report showed on Apr. 15.

US refinery inputs averaged more than 16.2 million b/d last week, 283,000 b/d more than the previous week’s average. Refineries operated at 92.3% of capacity last week.

Gasoline production increased last week, averaging more than 9.2 million b/d. Distillate fuel production decreased slightly last week, averaging 5 million b/d.

US crude oil imports averaged more than 7.1 million b/d for the week ended Apr. 10, down 1.1 million b/d from the previous week. Over the last 4 weeks, crude oil imports averaged more than 7.5 million b/d, which was 0.2% above the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 545,000 b/d. Distillate fuel imports averaged 219,000 b/d last week.

Energy prices

The New York Mercantile Exchange May crude oil contract rose $1.38 on Apr. 14 to $53.29/bbl. The June contract climbed $1.13 to $54.87/bbl.

The natural gas contract for May edged up nearly 2¢ to $2.53/MMbtu. The Henry Hub, La., gas price on Apr. 14 was down 1¢ to $2.55/MMbtu.

Heating oil for May delivery rose 1.8¢ to a rounded $1.80/gal. The price for reformulated gasoline stock for oxygenates blending for May was up 3¢ to a rounded $1.84/gal.

The May ICE contract for Brent crude climbed 50¢ to $58.43/bbl, while the June contract was up 77¢ to $59.81/bbl. The ICE gas oil contract for May rose $3 to $545.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $55.91/bbl on Apr. 14, up 5¢.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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