Next Release: March 20, 2013
Total crude oil production by the members of the Organization of the Petroleum Exporting Countries (OPEC) averaged 30.3 million barrels per day (bbl/d) in fourth-quarter 2012, down from 31.1 million bbl/d in the prior quarter. In the March Short-Term Energy Outlook (STEO), EIA projects that OPEC will cut crude oil production from an average of 30.9 million bbl/d for full-year 2012 to 30.3 million bbl/d in 2013 in response to expected non-OPEC supply growth. Total OPEC petroleum liquids production will not decline as much because of growth in OPEC's condensate and natural gas liquids. When non-crude liquids are included, total projected OPEC production declines from 36.4 million bbl/d in 2012 to 36.0 million bbl/d in 2013.
With liquids production in the United States projected to rise by 835,000 bbl/d in 2013, and Saudi Arabia continuing in its traditional role as the main swing producer among the OPEC countries, it is likely that total U.S. liquids production will exceed that of Saudi Arabia this year. However, as discussed in a recent article (see EIA's This Week in Petroleum December 19, 2012), the ordering of producers depends upon accounting conventions used to make the comparison. While both U.S. and Saudi production trends are closely watched by market analysts, any future crossing of production paths is more likely to fall into the category of an interesting factoid rather than a watershed event. Regardless of how much the United States is able to reduce its reliance on imported liquid fuels, it will not be insulated from price shocks that affect the global oil market. And Saudi Arabia will likely continue in its unique role as the only holder of significant spare oil production capacity among world oil producers.
The forecast reduction in production by OPEC member countries during 2013 suggests an increase in world surplus production capacity, a widely-watched oil market indicator. EIA estimates that OPEC surplus production capacity was about 2.8 million bbl/d in February, an increase of 0.8 million bbl/d over year-ago levels, but still 0.2 million bbl/d lower than the previous three-year average. Based on EIA projections, OPEC surplus capacity will average 2.9 million bbl/d in 2013 and 3.4 million bbl/d in 2014. In all cases, Saudi Arabia is the dominant holder of surplus capacity. These estimates do not include additional capacity that may be available in Iran but that is currently offline because of the effects of U.S. and European Union sanctions on Iran's ability to sell its oil.
While the sanctions on Iran have been an ongoing story, the death of Venezuelan President Hugo Chávez and the outcome of the ensuing succession process could have implications for that country's oil sector. For now, EIA is maintaining its Venezuelan production forecast on the assumption that current policies related to the oil sector are continued. For more information, see "Political risks focus attention on supply of Venezuelan oil to the United States."
EIA has lowered its expectations for oil production in Libya to reflect persistence of the technical problems and political pressures that have already curtailed output. Libya's precarious security environment creates downside production risk from the potential for additional disruptions due to attacks, strikes, or poorly maintained infrastructure.
In Iraq, payment disputes between Baghdad and the Kurdistan Regional Government are projected to lead to loss of output in the north that, at least partly, offsets increased crude oil exports from Iraq's southern fields. EIA, like many others, has frequently revised its expectations for Iraqi production growth downward because of ongoing political difficulties.
Since 2007, Angolan production increases have been followed by subsequent declines. Technical and maintenance problems have plagued some of Angola's deepwater fields for years, particularly the Greater Plutonio project, and will continue to limit Angola's crude oil production over the STEO forecast period. Nonetheless, EIA still anticipates Angolan crude oil output to gradually increase over the next two years as new deepwater production more than offsets chronic maintenance–related declines.
Gasoline and diesel fuel prices both fall again
The U.S. average retail price of regular gasoline decreased five cents to $3.71 per gallon, down 12 cents from last year at this time. Prices declined in all regions of the nation, with the largest decrease in the Midwest, where the price decreased nine cents to $3.62 per gallon. The East Coast price dropped four cents to $3.73 per gallon, and the Gulf Coast price is $3.54 per gallon, down three cents from last week. The West Coast price is down two cents to $4.05 per gallon, and the Rocky Mountain price is $3.47 per gallon, a penny less than last week.
The national average diesel fuel price decreased four cents to $4.09 per gallon, four cents lower than last year at this time. Prices decreased in all regions of the nation, with the East and West Coast prices dropping a nickel, to $4.12 per gallon and $4.23 per gallon, respectively. The Midwest and Rocky Mountain prices decreased to $4.04 per gallon and $4.01 per gallon, respectively, a decrease of four cents in each region. Rounding out the regions, the Gulf Coast price dropped three cents to $4.04 per gallon.
Propane inventories decline
U.S. propane stocks fell 2.7 million barrels to end at 43.0 million barrels last week, yet are 0.8 million barrels (1.9 percent) higher than the same period a year ago. Midwest inventories dropped by 1.6 million barrels, and Gulf Coast regional inventories declined by 1.0 million barrels. East Coast stocks dropped by 0.1 million barrels, and stocks in the Rocky Mountain/West Coast region also declined by 0.1 million barrels. Propylene non-fuel-use inventories represented 7.1 percent of total propane inventories.
Residential heating oil prices decrease while residential propane prices remain flat
Residential heating oil prices decreased during the period ending March 11, 2013. The average residential heating oil price fell by nearly 2 cents to $4.04 per gallon, almost 7 cents per gallon lower than the same time last year. Wholesale heating oil prices increased by 4 cents to $3.14 per gallon, 23 cents per gallon less than last year at this time.
The average residential propane price remained unchanged, holding at $2.49 per gallon for the fourth consecutive week, almost 38 cents per gallon lower than the same period last year. Wholesale propane prices decreased by less than a penny to remain at $0.97 per gallon for the week ending March 11, 2013, 35 cents per gallon lower than the March 12, 2012 price.
The last data collection for the 2012-2013 SHOPP season will be published next week on Wednesday, March 20, 2013.
Text from the previous editions of This Week In Petroleum is accessible through a link at the top right-hand corner of this page.
