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Hurricane recovery gives lift to oil prices; But key agency trims long-term price
by Daniel J. Graeber
Washington (UPI) Sep 14, 2017

US agency trims long-term oil price forecast
New York (AFP) Sept 14, 2017 - US energy forecasters trimmed their long-term outlook for oil prices and global energy consumption Thursday on expectations for more tepid economic growth.

A key driver in the report, the 2017 International Energy Outlook, is a projected 3.0 percent annual global growth through 2040, compared with last year's estimated 3.3 percent annual growth, according to the US Energy Information Administration.

The report lays out expectations for all major energy forms as rapid development in India and China drive world energy markets and the global push toward climate policy mitigation encourages renewable energy and hits coal.

The EIA now anticipates in its baseline scenario that oil prices will be $109 per barrel in 2040, down from $141 per barrel in last year's forecast, according to the US Energy Information Administration.

A "high" price forecast is $226 per barrel, while a "low" price forecast is $43 per barrel, both under their year-ago benchmarks.

The actual price will depend on factors such as whether US shale production disappoints or exceeds expectations and whether global energy demand outpaces estimates, said Ian Mead, EIA's assistant administrator for energy, who presented the findings at a briefing at a Washington think tank.

The EIA sees total global energy consumption of 736 quadrillion British thermal units in 2040, for a total growth of 28 percent compared with 2015. Last year's report projected 815 quadrillion British thermal units for growth of 48 percent from 2012.

While the report is broadly consistent compared with last year's analysis, the agency now sees a jump in the penetration of electric cars by the end of the forecast period, Mead said.

Renewable energy also continues to see solid growth (2.8 percent per year), while coal is the only major energy source not to see growth, according to the EIA.

An expected build in demand as refiners move back into action in the United States helped drive crude oil prices higher for a second day early Thursday.

Crude oil prices spiked Wednesday after the International Energy Agency said the level of oil stocks held in global inventories could move toward, or possibly below, the five-year average "very soon," depending on how quick the U.S. energy sector recovers from Hurricanes Harvey and Irma.

This week, the Organization of Petroleum Exporting Countries reported member states were producing fewer barrels and that global demand was expected to edge higher. The IEA added that overall production was on the decline and the level of stocks for members of the Organization for Economic Cooperation and Development was only slightly above the five-year average.

The U.S. Energy Department said that, as of 2:00 p.m. EDT, Tuesday, four refineries were still closed because of the impact of Hurricane Harvey, which made landfall in late August. This means about 4 percent of total U.S. refining capacity is still shut down. With Florida and the surrounding region recovering from Hurricane Irma, demand strains could compound as fuel service stations struggle to play catch up. U.S. gasoline supplies are at a three-year low.

"This basically means that [refiners] will demand more crude oil as they look to rebuild supply," Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report. "It also means that the normal seasonal slowdown for crude in maintenance season on will be out of kilter."

Demand pressures typically wane after the long Labor Day holiday in the United States as refiners shift to a winter-blend of gasoline and consumers wrap up the busy summer travel season.

The price for Brent crude oil was up 0.82 percent just moments before trading in New York began to $55.61 per barrel, testing a yearly high. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.2 percent to $49.90 per barrel.

Market analysts and reports this week cautioned against reading too much into the post-hurricane rally. If oil prices move much higher, that could trigger stronger production from some of the shale oil basins in the United States. Meanwhile, some traders are looking at the difference between WTI and Brent for clues as to what happens next.

"Once the impact of hurricanes begins to fade, we should see the spread start to narrow, but whether it is Brent falling towards WTI or WTI rising towards Brent, or a combination of both, remains to be seen," Ole Hanson, the head of commodity strategy at Saxo Bank, said in an emailed report.

IEA: Oil markets managed, but beware of the weather
Washington (UPI) Sep 13, 2017
Even though the sector was able to cope, the International Energy Agency said severe weather in the United States should serve as a warning for oil markets. Hurricane Harvey hit the southern coast of Texas in late August and forced the closure of several refineries and some production centers in the region. Hurricane Irma made landfall in Florida earlier this week and, as the state has ... read more

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