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A NEW REPORT RELEASED TODAY SAYS THAT THE PRICES OF MANY PETROLEUM PRODUCTS WILL BE HIGHER IN THE FUTURE
The tight global markets and elevated crude oil prices are expected to result in higher prices for petroleum products . The cost of imported crude oil to refineries this winter is projected to average 98.3 c/g (about $40 per bbl) compared to 70.1 c/g last year. During the winter, WTI prices are expected to decline from their current record levels but remain in the $40 per bbl range, but despite above-average natural gas stocks, average winter natural gas prices, both at the wellhead and retail levels, are expected to be above those of last winter, particularly during the fourth quarter of 2004, in response to the hurricane-induced production losses in the Gulf of Mexico during September.
Increases in heating fuel prices are likely to generate higher expenditures even in regions where demand for fuel is expected to fall. Average residential natural gas prices this winter are expected to be 10 percent higher year-over-year and household expenditures are expected to be 15 percent higher.
Therefore, residential space-heating expenditures are projected to increase for all fuel types compared to year-ago levels.
Demand is expected to be up by 1.637 percent. This increase reflects greater heating degree days in key regions with larger concentrations of gas-heated homes and continued demand increases in the commercial and electric power sectors. Due to the availability of primary inventories, many petroleum products are expected to be reasonably well protected against the impact of demand surges under most circumstances. As of October 1, working natural gas inventories were estimated to be 3.6tcf, up 2 percent from three years ago, 3 percent from two years ago and 1 percent from last year.
Other interesting findings from this report are that the spot price for crude oil continues to fluctuate. Prices continue to remain high even thought OPEC crude oil production reached it's highest levels in September since OPEC quotas were established in 1982. Overall inventories are expected to be in the normal range, petroleum demand growth is projected to slow, and natural gas prices will be will increase.