Global forecasters cut non-OPEC oil supply growth
WASHINGTON (Reuters) - Two of the world's most closely watched energy forecasters on Tuesday slashed predictions for output from oil fields outside the OPEC cartel in 2008 -- more bad news for a global economy struggling with record high oil prices and tight supply.
The dimming outlook for world production will keep the market on edge even as high prices hit consumers and cut into the pace of global demand growth.
The International Energy Agency, adviser to 27 industrial economies, cut its expectations for supply growth from countries outside OPEC to 460,000 barrels per day above 2007 levels, down from 680,000 bpd a month ago.
The U.S Energy Information Administration, the statistical arm of the Energy Department, cut its forecast for non-OPEC output growth nearly in half to 310,000 bpd from 600,000 bpd.
Both groups have consistently over-shot on non-OPEC supply growth in recent years, as soaring field costs and geopolitical constraints have wreaked havoc on official timelines.
Partly due to the dearth of supplies outside the Organization of Petroleum Exporting Countries, the EIA raised its projections for 2008 oil prices by nearly 12 percent. Benchmark West Texas Intermediate oil prices will average $122.15 a barrel, up from its previous forecast of $109.53 a barrel, the EIA predicted.
Oil prices hit a record near $140 a barrel last week, a seven-fold increase since 2002 that has been driven by surging demand from China and other developing countries.
The EIA said it was still accounting for a planned non-OPEC supply increase of 820,000 bpd later this year as big fields in Brazil and Azerbaijan come online. But, given recent delays, the EIA hedged its bets on the probability of such supplies materializing as planned.
BACK TO THE DRAWING BOARD
"Given recent history, EIA believes that the pace and timing of non-OPEC supply growth will continue to be subject to possible delays in key projects and accelerating production declines in some older fields," the agency said.
The EIA has sifted through new data that paints a less rosy picture for supplies from three key producers -- Russia, Mexico and Brazil -- said Matt Cline, an economist at the agency.
In Russia, the world's No. 2 oil exporter behind Saudi Arabia, a venture with LUKOIL (LKOH.MM) and U.S.-based ConocoPhillips (COP.N) to produce 160,000 bpd in Russia's north has been repeatedly delayed.
In Mexico, production from the huge Cantarell offshore field plummeted by more than 30 percent in the first four months of 2008, versus a year ago, Cline said.
"Like everyone else, we had been expecting Cantarell to decline this year," Cline said. "But no one had been expecting it to decline by that much."
In Brazil, the EIA has dramatically increased its baseline for decline rates in some larger, more mature fields, especially in its offshore areas. Continued...
