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![Page 1: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/1.jpg)
Petroleum Supply and Market Outlook
Briefing for the
7th Annual International Airport Operations/Jet Fuel Conference
Orlando, Florida
Mike Burdette
Petroleum Division, Energy Information Administration
February 3, 2005
![Page 2: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/2.jpg)
EIA’s Petroleum Supply and Market Outlook
• Crude oil price outlook• Global supply/demand fundamentals• Global and U.S. inventories• U.S. refinery capacity and utilization• U.S. jet fuel outlook
– Supply
– Demand
– Prices
![Page 3: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/3.jpg)
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Do
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Forecast
WTI Crude Oil Price: Potential for Volatility Around Base Case
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
![Page 4: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/4.jpg)
Weighing the Market
BullsBulls•Continued strong economic and oil demand growth
•Little spare capacity available
•Relatively low inventories
•Possible supply disruptions, including Iraq, Russia, Venezuela, Saudi Arabia, and Nigeria BearsBears
•Slowing economic and oil demand growth
•More supply
•Inventory recovery
•More capacity growth
•Milder winter weather
•Easing supply risks
![Page 5: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/5.jpg)
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WTI Spot Price (2004 $)OECD Days SupplyWorld Excess Production Capacity (right axis)
Low Excess Capacity and Low Days of Supply Are Fundamentals Supporting High Crude Prices
Sources: WTI: Reuters; OECD Days Supply: International Energy Agency; World Excess Production Capacity: U.S. Energy Information Administration estimates.
![Page 6: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/6.jpg)
OPEC Spare Capacity Is Extremely Tight Right Now
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OPEC Crude Oil Production
Spare Capacity
Current Excess Capacity
Saudi Arabia 1.0 – 1.5
Other Persian Gulf 0
Other OPEC 0
Source: U.S. Energy Information Administration estimates.
![Page 7: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/7.jpg)
Annual World Oil Demand Growth Was Unexpectedly Strong in 2004
-0.5
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1.0
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1991-1999
Average
2000 2001 2002 2003 2004 2005 2006
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US
China
Rest of the World
ForecastHistory
Source: EIA, Short-Term Energy Outlook, January 2005.
![Page 8: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/8.jpg)
2.3
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2.9
3.0
Jan-00
Jul-00
Jan-01
Jul-01
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Jan-03
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Jan-04
Jul-04
Jan-05
Jul-05
Bil
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NOTE: Colored Band is Normal Stock Range
OECD Commercial Inventories
Days Supply (right axis)
Inventories (left axis)
OECD Commercial Oil Inventories(Using 5-Year Average and +/- 1 STD)
Source: History – IEA; Forecast – EIA Short-Term Energy Outlook, January 2005.
![Page 9: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/9.jpg)
U.S. Crude Inventories Projected to Remain in Normal Range
250
270
290
310
330
350
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
U.S. Crude Oil Actual
NOTE: Colored band is the normal inventory range.
U.S. Crude Oil InventoryForecast
Sources: EIA, Short-Term Energy Outlook, January 2005.
History
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![Page 10: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/10.jpg)
U.S. Gasoline, Distillate and Jet Fuel Inventories
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NOTE: Colored Bands are Normal Stock Ranges
History Forecast
Jet Fuel
Distillate
Gasoline
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
![Page 11: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/11.jpg)
Capacity Surplus Disappearing, Creating Short-Term Challenge
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U.S. Refining Capacity & Inputs
Gross Inputs
Operable Capacity
Source: U.S. Energy Information Administration.
Forecast
![Page 12: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/12.jpg)
U.S. Jet Fuel Supply and Demand
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/03
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/04
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/05
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/06
Th
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Net Imports
Production
Demand
Actual Forecast9/11
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
![Page 13: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/13.jpg)
U.S. Jet Fuel Inventories
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35
40
45
50
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
Mil
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NOTE: Colored Bands are Normal Stock Ranges
History Forecast
Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2005.
![Page 14: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/14.jpg)
Jet Fuel Supply/Demand Balance Reflected in Spreads
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Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
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Jan-03
Jan-04
Jan-05
Cen
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U.S. Gulf Coast Jet Fuel, Heating Oil, and WTI Crude Oil
Source: Reuters.
Spot Jet Fuel Price
WTI Price
Spot Heating Oil PriceSpot Heating Oil Price
![Page 15: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/15.jpg)
Crude Oil, Jet Fuel and Gasoline Prices
$0
$10
$20
$30
$40
$50
$60
$70
$80
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$100
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Forecast
Sources: EIA Short-Term Energy Outlook, January 2005.
Refiner Jet Fuel Sales to End Users
Retail Regular Gasoline
Crude Oil (WTI)
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Petroleum Supply and Market OutlookConclusion
• EIA expects global crude oil prices to decline modestly this year and next, but remain over $40 per barrel (WTI)
• Growth in global oil demand has outstripped that in supply in recent years, decreasing spare production capacity
• Capacity expansion will begin to catch up, re-establishing spare capacity
• Global and U.S. oil inventories will return to/remain near average levels through next year
• Jet fuel supply will be adequate, as refineries push out gasoline and distillate
• Jet fuel prices should remain relatively stable, near current (high) levels
![Page 17: Petroleum Supply and Market Outlook Briefing for the 7 th Annual International Airport Operations/Jet Fuel Conference Orlando, Florida Mike Burdette Petroleum.](https://reader035.fdocuments.net/reader035/viewer/2022070403/56649f2e5503460f94c48227/html5/thumbnails/17.jpg)
Petroleum Supply and Market Outlook
Briefing for the
7th Annual International Airport Operations/Jet Fuel Conference
Orlando, Florida
Mike Burdette
Petroleum Division, Energy Information Administration
February 3, 2005