The US Energy Information Administration (EIA) has released the September revision to its Short Term Energy Outlook. The major change is that the EIA now expects the average price of a barrel of crude to rise more sharply than previously forecast.
The average price of a barrel of West Texas Intermediate (WTI) over the course of 2013 is now estimated at US$ 93.50/bbl., while the annual average price of Brent is estimated at US$ 108.12.
Average prices for WTI for 2014 are forecast to be US$ 96.21/bbl and the price for Brent is forecast at US$ 102.21 for 2014.
Crude price estimates have additionally jumped significantly since July, when the EIA forecast a WTI price of US$ 94.65/bbl for 2013 and US$ 104.68 for a barrel of Brent. The July forecast for 2014 predicted prices of US$ 90.50 for WTI and US$ 97.50 for Brent.
OPEC members Iran, Iraq, Libya and Nigeria accounted for lost production in August of approximately 2.1 million bpd. Non-OPEC producers added another 600 000 bpd of lost production in August, bringing total shortfall to 2.7 million bpd. The EIA notes significant outages for Chevron Corp. and ExxonMobil, both of which have operations in Nigeria.
Actual production shortages may cause price rises, but typically lower production is not now being made up by higher prices because demand has been falling. Perceived shortages, such as those linked to US military action in the Middle East, can cause price spikes that are not a product of actual shortage. This is when oil companies benefit the most.
Currently, higher prices will not help companies such as Chevron and ExxonMobil very much, because their production is lagging.
Edited from various sources by Emma McAleavey.
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