Crude Oil, Heating Oil, and Propane Market Outlook

1
Crude Oil, Heating Oil, and Propane Market Outlook

• Briefing for the
• State Heating Oil and Propane Program Conference
• Wilmington, DE

by Douglas MacIntyre Petroleum Division, Energy
Information Administration August 13, 2001
2
Short-Term World Oil Price Forecast
West Texas Intermediate (WTI)
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
3
Price Movements Related to Supply/Demand Balance
Total includes commercial and government stocks.
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
4
OPEC Production Likely To Remain Low
Projections
History
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
5
U.S. Reflects World Market
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
6
Crude Oil OutlookConclusions

• Iraqi export changes lag in impact on U.S.
• OPEC crude oil production cuts could make for a
  tight situation this winter
• WTI prices could average 28-30 per barrel or
  higher this winter

7
Distillate Prices Increase With Crude Oil
8
Distillate Stocks on the East Coast Were Very Low
Entering Last Winter
Source Energy Information Administration
9
Distillate Demand Strong Last Winter
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
10
More Supply Possible This Fall than Forecast
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
11
Distillate Fuel Oil Imports Could Be Available -
For A Price
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
12
Distillate Supply/Demand Balance Reflected in
Spreads
13
Distillate Stocks Expectedto Remain Low
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
14
Winter Crude Oil andDistillate Price Outlook
Sources History EIA Projections Short-Term
Energy Outlook, August 2001.
15
Heating Oil OutlookConclusion

• Distillate stocks are likely to be higher than
  last year, but still relatively low
• Prices likely to average a little lower than last
  winter given current crude oil price forecast
• Residential customers should be able to purchase
  less fuel this winter, even if weather is normal
• Lower price times lower volumes equals lower
  bills this winter than the high ones from last
  year

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Propane Prices Follow Crude Oil
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U.S. Propane Production
Source Energy Information Administration
18
Propane Production by Source
Source Energy Information Administration
19
U.S. Propane Imports
Source Energy Information Administration
20
Propane Demand is Highly Seasonal, But Fresh
Supply is Not
Source Energy Information Administration
21
U.S. Propane Stocks
Average Range
Actual
Forecast
Lower Operational Inventory 18.5 Million Barrels
Source Energy Information Administration
22
PAD District II Stocks (Midwest)
Average Range
Source Energy Information Administration
23
PAD District III Stocks (Gulf Coast)
Average Range
Source Energy Information Administration
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Propane OutlookConclusion

• Lower residential prices possible this winter
• U.S. inventories likely to be ample prior to the
  heating season.
• However, Midwest inventories remain relatively
  low
• Demand uncertain due to weather and economy.
• Lower natural gas prices likely to avert gas
  plant shut-ins.
• But, temporary supply shortages may still occur
  due to existing bottlenecks in delivery system.