U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
January 12, 1998

With 3 months of the 1997-1998 heating season now in the past, previous projections of lower winter fuels prices are translating into real reductions in heating bills for some consumers, according to a report released today by the Energy Information Administration (EIA). Reduced heating fuel prices are expected to be seen through most, if not all, of the remainder of the heating season due to:

• Lower current and expected near-term world oil prices
• Relatively high current levels of heating fuel inventories in or near the major consuming areas.

The current edition of EIA's Short-Term Energy Outlook reports that average retail heating oil prices in the fourth quarter 1997 were an estimated 12 percent lower than they were the previous year. Current and expected winter peak prices for natural gas are well below levels seen last year, which should result in some relief to the residential customer compared to prices seen last winter.

Other highlights from the Short-Term Energy Outlook include:

The Southeast Asia Currency Crisis
The recent currency crisis in Southeast Asia has added another variable of uncertainty in assessing the short-term world oil market. Between 1991 and 1996, oil demand in Other Asia, defined in EIA's forecast as all Asia except Japan and China, increased at an average annual rate of 8 percent. The major changes in several Asian economies are expected to dramatically decrease the growth in Asian oil demand to between 400,000 and 500,000 barrels per day in 1998 and 1999, substantially less than the 600,000-700,000 barrels per day increase forecast previously.

Continued World Oil Demand Strength
Despite expected slower growth in Asian markets, world oil demand is expected to increase by 1.8 million barrels per day in 1998 and another 1.9 million barrels per day in 1999. World oil demand is forecast to grow at an average annual rate of 2.5 percent between 1997-1999, after growing at an average annual rate of 1.9 percent between 1992-1996.

World Oil Prices Expected to Hold in the $16 to $18 per Barrel Range Through 1999
Oil prices should level off in 1998 at between $16 and $17 per barrel, slightly above current levels. In 1999, the world oil price is expected to increase slightly to between $17 and $18 per barrel. The forecast assumes that Iraq will be exporting about a million barrels per day during the forecast period. Following the most recent OPEC ministerial meeting, OPEC is expected to increase production by about 800,000 barrels per day in 1998 and by another 400,000 barrels per day in 1999. Sustained growth of non-OPEC supply is expected to continue for the foreseeable future, both inside and outside of the Organization for Economic Cooperation and Development (OECD).

Natural Gas Prices to Decline Through 1999
After a stormy period of price gyrations, natural gas wellhead prices are expected to calm down and resume their normal seasonal price patterns--peaking in the winter, dropping in the spring and summer--during the forecast period. Natural gas spot and near-term futures prices have tumbled by one-third since mid-November. The annual average wellhead price is expected to decline by as much as 13 percent in 1998 and perhaps a little more in 1999 as a result of increases in productive capacity and Canadian imports, as well as projected slower economic growth.

Stronger Electricity Growth Expected in 1998
Electricity demand in 1998 is expected to grow by 2.9 percent despite an anticipated slowdown in U.S. economic growth from the relatively high rate seen in 1997. Projected growth would be led by increased residential demand in the first 3 quarters of 1998 relative to those quarters in 1997, when winter was warmer than normal and summer was cooler than normal.

The Short-Term Energy Outlook is published quarterly in January, April, July, and October. Monthly updates are now being released on EIA's Internet Web Site to meet the public's demand for more timely availability of energy data and forecasts. Users can view and download the quarterly forecast analysis, monthly updates, and the forecasting model from the EIA Home Page on the World Wide Web system. Open the Uniform Resource Locator (URL) http://www.eia.doe.gov and select "Forecasting" from the menu. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo.

Copies of the published report Short-Term Energy Outlook, First Quarter 1998 are available 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: Thomas Welch, 202/586-1178

EIA-98-03

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