JEDDAH – The oil & gas industry has experienced a good start to 2013 as improvements in the global economy has seen both the US Energy Information Administration (EIA) and OPEC raise their forecasts for global oil demand in 2013. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained over 6 percent year-to-date.
The EIA has raised its 2013 growth forecasts by 110,000 barrels per day (bpd) to 1.05 million bpd in 2013. Global oil demand is now expected to total 90.2 million bpd this year. The increase follows a report from OPEC earlier in the week projecting oil demand to increase by 840,000 bpd, 80,000 bpd higher than its previous estimate. Prices for Brent crude have gained approximately 10 percent year-to-date hitting a 10-month high of over $118 a barrel.
"Market fundamentals and expectations strengthened in January 2013 because of earlier than-expected cutbacks in Saudi Arabian oil production and greater optimism about economic growth, particularly in China," the EIA said in its report.
Meanwhile, the US was more reliant on the Middle East for its oil imports last year, underscoring the critical importance of the politically unstable region for the country despite the growing energy independence its shale gas revolution is bringing.
While domestic production increased the most in 150 years last year, Washington will confirm later this week that oil imports from the Gulf region continued to rise.
By the end of November the US had already imported more than 450 million barrels of crude from Saudi Arabia, more than it imported from Riyadh in the whole of 2009, 2010 or 2011, according to figures from the US Energy Department. For the first time since 2003, Saudi imports accounted for more than 15 per cent of total US oil imports. The Gulf as a whole accounted for more than 25 percent, a nine-year high.
Other Gulf exporters are also seeing unusually strong US demand. By the end of November, Kuwait had shipped more oil to the US than in any year since 1998. Analysts are expecting annual figures to be released later this week to confirm the trend seen up to November.
New extraction techniques – most notably hydraulic fracturing, or fracking, and horizontal drilling – have unlocked huge hydrocarbon resources in the US previously thought unrecoverable, raising expectations that over time US dependence on Middle East oil will drop. — Agencies