EIA Reports

U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
January 8, 1999

World Oil Prices Expected to Rise From Low December Levels

The world oil price (as indicated by the average cost of imported crude oil to U.S. refiners) is expected to climb from the estimated December level of about $9.25 per barrel to about $13 per barrel by the end of 1999. This projection is included in information released today by the Energy Information Administration (EIA) in the Short-Term Energy Outlook. In this issue of EIA's monthly forecast, the Agency extends its short-term projections through the year 2000 for the first time.

The world oil price is expected to move above $14 per barrel by the end of 2000, still below the 1997 average of $18.60 per barrel. World oil supply is expected to increase by only 0.6 million barrels per day in 1999, and by another 1.1 million barrels per day in 2000. Meanwhile, world oil demand is expected to grow at a faster rate through 2000 than it did in 1998, suggesting an end to the build-up of world oil stocks seen since 1995.

Despite the assumption of slower economic growth, U.S. petroleum demand is expected to increase in 1999 by over 500,000 barrels per day, or 2.9 percent, from 1998 levels. Much of this growth is expected as a result of increases in demand for heating oil and other weather-sensitive products (such as propane and heavy fuel oil), based on an assumed return to normal weather patterns, as well as continued growth in transportation demand. U.S. petroleum demand is expected to rise by an additional 300,000 barrels per day in 2000. U.S. net imports of petroleum in 2000 are forecast to account for 52 percent of total U.S. petroleum demand, up from an estimated 50 percent in 1998.

Other highlights from the Short-Term Energy Outlook include:

• U.S. heating oil prices in first-quarter 1999 are expected to rise an average of just 2 cents per gallon above fourth-quarter 1998 prices, a level still 10 cents per gallon below the first-quarter 1998 average. This comparatively low price scenario is expected despite the assumption of normal weather for the first quarter of this year (18 percent colder than in 1998) because of the current low world oil prices and plentiful distillate inventories.

• Iraqi oil exports do not appear to have been affected by airstrikes on that country in mid-December. This forecast includes the assumption that Iraqi oil exports will continue under the current United Nations Security Council resolutions, meaning, by EIA's estimates, that Iraq will export about 1.8 million barrels per day in 1999 and 2.0 million barrels per day in 2000.

• Natural gas spot prices are projected to remain under $2 per thousand cubic feet through the summer of 1999, unless the weather in the gas-consuming regions turns unusually cold over the next few months. Current high storage levels relative to levels last year at this time will serve to moderate prices.

• Electricity demand in the first quarter of 1999 is expected to increase significantly over year-earlier levels due to higher heating demand, especially in the residential and commercial sectors. Expected growth in electricity demand in 1999 is 1.6 percent over 1998 levels, reflecting a return to normal summer weather (cooler than in 1998) and a general slowing in the economy. In 2000, electricity demand is expected to increase by 2.2 percent, based on assumptions of normal weather.

The Short-Term Energy Outlook is published monthly on EIA's Internet Web Site to meet the public's demand for more timely energy data and forecasts. Users can view and download the forecast analysis, tables and charts by going to the EIA Home Page at http://www.eia.doe.gov and selecting "Forecasts" from the menu. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo/pub. In addition to the Internet releases, the Short-Term Energy Outlook is published in printed form in January, April, July and October.

Printed copies of the Short-Term Energy Outlook, January 1999 will be available later this month from the U.S. Government Printing Office, 202/512-1800 or through EIA's National Energy Information Center 202/586-8800.

EIA Program Contact: David Costello, 202/586-1468
EIA Press Contact: National Energy Information Center, 202/586-8800, infoctr@eia.doe.gov

EIA-99-01

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