Bloomberg News

U.S. Increases 2011 Crude Oil Price, Cuts Demand Outlook

November 09, 2011

(Updates with Energy Department comments in third paragraph, heating-oil expenditures in 10th.)

Nov. 8 (Bloomberg) -- The U.S. Energy Department increased its crude-oil price forecast for 2011 by 1.6 percent and cut the projection for global oil demand.

West Texas Intermediate oil will average $93.80 a barrel this year, up from the October projection of $92.36, the department said today in its monthly Short-Term Energy Outlook.

“Oil prices continue to face upward price pressure because of supply uncertainty resulting from ongoing unrest in the oil- producing regions of the Middle East and North Africa,” the department said in the report. “However, there may be downward price pressure if Libya is able to ramp up oil production and exports sooner than anticipated.”

Libya is increasing production after the end of the war that ended the 42-year rule of Muammar Qaddafi. Libyan output fell to 60,000 barrels a day in July from 1.7 million barrels in January, according to the International Energy Agency.

Crude oil rose 18 percent to $93.19 a barrel on the New York Mercantile Exchange in October. Oil for December delivery gained 60 cents, or 0.6 percent, to $96.12 a barrel at 12:23 p.m. in New York, after reaching $96.87, the highest intraday level since Aug. 1.

Prices in 2012 will average $91.13 a barrel, a 3.6 percent increase from last month’s estimate of $88.

Global Demand

The Energy Department cut its forecast for global oil consumption for this year by 0.2 percent to 88.23 million barrels a day from 88.4 million estimated last month, the report showed. The demand forecast for 2012 is 89.62 million barrels a day, down from last month’s estimate of 89.84 million.

“Downside demand risks continue as fears persist about weakening global economic growth, contagion effects of the debt crisis in the European Union, and other fiscal issues facing national governments,” the department said in the report.

U.S. oil consumption will average 18.93 million barrels a day in 2011, down from last month’s forecast of 18.95 million. Demand in 2012 will be 19.04 million, the department said.

Average household heating-oil expenditures will rise 10 percent this winter from a year earlier to $2,535, as heating oil prices increased to $3.81 a gallon from $3.38 last year, according to the department. The government had forecast an average expenditure of $2,493 last month, with the average heating-oil price at $3.71.

Oil demand from the 30 members of the Organization for Economic Cooperation and Development will drop 0.9 percent from last year to an average 45.7 million barrels a day this year.

The OECD doesn’t include developing countries such as China, India and Brazil. Consumption by non-OECD countries will increase 3.8 percent to 42.53 million barrels a day this year.

--Editors: Richard Stubbe, Margot Habiby

To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.


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