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Petroleum Supply and Market Outlook
Briefing for the
7th Annual International Airport Operations/Jet Fuel Conference
Orlando, Florida
Mike Burdette
Petroleum Division, Energy Information Administration
February 3, 2005
EIA’s Petroleum Supply and Market Outlook
• Crude oil price outlook• Global supply/demand fundamentals• Global and U.S. inventories• U.S. refinery capacity and utilization• U.S. jet fuel outlook
– Supply
– Demand
– Prices
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Jan-01
Jul-01
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Jul-05
Jan-06
Jul-06
Do
llar
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er B
arre
l
Forecast
WTI Crude Oil Price: Potential for Volatility Around Base Case
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
Weighing the Market
BullsBulls•Continued strong economic and oil demand growth
•Little spare capacity available
•Relatively low inventories
•Possible supply disruptions, including Iraq, Russia, Venezuela, Saudi Arabia, and Nigeria BearsBears
•Slowing economic and oil demand growth
•More supply
•Inventory recovery
•More capacity growth
•Milder winter weather
•Easing supply risks
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up
ply
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Mil
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WTI Spot Price (2004 $)OECD Days SupplyWorld Excess Production Capacity (right axis)
Low Excess Capacity and Low Days of Supply Are Fundamentals Supporting High Crude Prices
Sources: WTI: Reuters; OECD Days Supply: International Energy Agency; World Excess Production Capacity: U.S. Energy Information Administration estimates.
OPEC Spare Capacity Is Extremely Tight Right Now
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Mil
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OPEC Crude Oil Production
Spare Capacity
Current Excess Capacity
Saudi Arabia 1.0 – 1.5
Other Persian Gulf 0
Other OPEC 0
Source: U.S. Energy Information Administration estimates.
Annual World Oil Demand Growth Was Unexpectedly Strong in 2004
-0.5
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1.0
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3.0
1991-1999
Average
2000 2001 2002 2003 2004 2005 2006
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arr
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ay
US
China
Rest of the World
ForecastHistory
Source: EIA, Short-Term Energy Outlook, January 2005.
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.0
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
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Jul-03
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Jul-04
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Jul-05
Bil
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arre
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NOTE: Colored Band is Normal Stock Range
OECD Commercial Inventories
Days Supply (right axis)
Inventories (left axis)
OECD Commercial Oil Inventories(Using 5-Year Average and +/- 1 STD)
Source: History – IEA; Forecast – EIA Short-Term Energy Outlook, January 2005.
U.S. Crude Inventories Projected to Remain in Normal Range
250
270
290
310
330
350
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
U.S. Crude Oil Actual
NOTE: Colored band is the normal inventory range.
U.S. Crude Oil InventoryForecast
Sources: EIA, Short-Term Energy Outlook, January 2005.
History
Mill
ion
Ba
rre
ls
U.S. Gasoline, Distillate and Jet Fuel Inventories
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75
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125
150
175
200
225
250
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
Mil
lio
n B
arre
ls
NOTE: Colored Bands are Normal Stock Ranges
History Forecast
Jet Fuel
Distillate
Gasoline
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
Capacity Surplus Disappearing, Creating Short-Term Challenge
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U.S. Refining Capacity & Inputs
Gross Inputs
Operable Capacity
Source: U.S. Energy Information Administration.
Forecast
U.S. Jet Fuel Supply and Demand
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200
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1/1
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/15
/00
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/15
/01
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/15
/03
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/04
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/15
/05
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/15
/06
Th
ou
sa
nd
Ba
rre
ls p
er
Da
y
Net Imports
Production
Demand
Actual Forecast9/11
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
U.S. Jet Fuel Inventories
30
35
40
45
50
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
Mil
lio
n B
arre
ls
NOTE: Colored Bands are Normal Stock Ranges
History Forecast
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
Jet Fuel Supply/Demand Balance Reflected in Spreads
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Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
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Jan-03
Jan-04
Jan-05
Cen
ts P
er G
allo
n
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U.S. Gulf Coast Jet Fuel, Heating Oil, and WTI Crude Oil
Source: Reuters.
Spot Jet Fuel Price
WTI Price
Spot Heating Oil PriceSpot Heating Oil Price
Crude Oil, Jet Fuel and Gasoline Prices
$0
$10
$20
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Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
$/G
allo
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Cen
ts/G
allo
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Forecast
Sources: EIA Short-Term Energy Outlook, January 2005.
Refiner Jet Fuel Sales to End Users
Retail Regular Gasoline
Crude Oil (WTI)
Petroleum Supply and Market OutlookConclusion
• EIA expects global crude oil prices to decline modestly this year and next, but remain over $40 per barrel (WTI)
• Growth in global oil demand has outstripped that in supply in recent years, decreasing spare production capacity
• Capacity expansion will begin to catch up, re-establishing spare capacity
• Global and U.S. oil inventories will return to/remain near average levels through next year
• Jet fuel supply will be adequate, as refineries push out gasoline and distillate
• Jet fuel prices should remain relatively stable, near current (high) levels
Petroleum Supply and Market Outlook
Briefing for the
7th Annual International Airport Operations/Jet Fuel Conference
Orlando, Florida
Mike Burdette
Petroleum Division, Energy Information Administration
February 3, 2005
