An outlook released by the Dept. of Energy indicates that although diesel prices may ease in the coming months, high crude prices will continue to keep pump prices at a premium. The Energy Information Administration (EIA) has upwardly revised its third quarter estimate for the crude West Texas Intermediate (WTI) prices nearly four dollars to $41 per barrel.
Diesel prices have recently reflected crude prices closely. See Diesel, Crude Prices Set Records.
The Wall Street Journal Online reported that crude oil for September delivery struck a record high of $45.50 in electronic trading on the New York Mercantile Exchange on Thursday— but still about $12 per barrel less than it was leading up to the first Gulf war.
EIA acknowledged that OPEC has responded to steep energy demands by boosting output by another half-million barrels of crude oil per day (mb/d) to 29.8 mb/d. However, these increases don’t even keep pace with rising demand. “With rising consumption and little global surplus capacity, near-term prices remain volatile and sensitive to news relating to possible reductions in oil production,” EIA said.
In a separate report released by the International Energy Agency, world demand growth for crude is expected to wane over 2005. The demand growth forecast is expected to be 2.5 mb/d in 2005 and 1.8 mb/d in 2005.
A slower growth combined with high OPEC output rates may give pump prices a chance to ease in the months ahead. “Although the current high levels of OPEC production are expected to push WTI prices below $40 per barrel on average by the fourth quarter 2004, a sustained sharp decline in crude oil prices is unlikely during 2005 because world oil demand is expected to continue its strong growth, keeping petroleum inventories tight,” EIA said.
EIA noted that world oil surplus production capacity is near its lowest point in 30 years.