THE OUTLOOK: GROWING MARKETS, ADEQUATE SUPPLIES/MODERATE PRICES

The oil and gas industry's next 3 years will be a period of growing markets, adequate supplies, and moderate prices. Despite efforts in some countries to shift consumption away from oil, demand for petroleum products will increase during 1994-96. Because of strong, oil-intensive economic growth in the developing world, oil will lose little of its share of the growing energy market.

Oct. 25, 1993

3 min read

The oil and gas industry's next 3 years will be a period of growing markets, adequate supplies, and moderate prices.

Despite efforts in some countries to shift consumption away from oil, demand for petroleum products will increase during 1994-96. Because of strong, oil-intensive economic growth in the developing world, oil will lose little of its share of the growing energy market.

Natural gas will claim most of what little market share oil does lose - and more. The next 3 years will represent the beginning of a long period of market growth for gas, which will become the premium fuel in a growing list of applications.

To meet expected oil demand growth, production will have to increase among members of the Organization of Petroleum Exporting Countries. Output declines in the Commonwealth of Independent States and Eastern Europe will nearly offset non-OPEC gains elsewhere.

Additions to production capacity, however, will outrun demand through 1996, which will keep oil prices from rising significantly.

This is the near-term world for the industries that provide two thirds of the world's energy, as depicted in this exclusive, Oil & Gas Journal 3 year forecast.

In the articles that follow, Economics Editor Robert J. Beck analyzes trends of recent years and provides forecasts of key market and operating indicators for 1994, 1995, and 1996. Here are the highlights:

Economies will remain strong in the developing world, recover in the industrialized world, and slump further in the formerly Communist world before recovering late in the forecast period as market transitions begin to take effect.
Total worldwide energy demand in 1996 will exceed this year's estimated consumption by 7.7%.
Worldwide oil demand will increase 6.6% to an average of 69.9 million b/d in 1996. Oil's share of the energy market will be 39.5% that year vs. 39.9% in 1993. Fastest-growing products will be middle distillates and miscellaneous products, such as petrochemical feedstocks for which technological advances are boosting demand.
The world's capacity to produce oil and natural gas liquids will rise by 7.5% to 76.7 million b/d in 1996. This 5.37 million b/d gain will exceed the 4.15 million b/d anticipated increase in demand. The forecast assumes that Iraqi oil returns to the market in 1995 and that Iraq's production reattains capacity levels the following year.
Worldwide consumption and production of natural gas will rise 8.6% during the forecast period to 76.2 tcf in 1996. The gas share of the energy market will rise to 23% from 22.8%.
Combined, oil and gas will account for 62.5% of the energy market in 1996, compared with an estimated 62.7% this year.
Active rigs outside the U.S. and Canada will average 840 in 1996 vs. an estimated 775 in 1993. In the same period, rig counts will rise to 810 from 760 in the U.S. and to 175 from 170 in Canada.
Refining capacity will rise by 900,000 b/d during the forecast period to 75 million b/d. The capacity utilization rate will rise to 89.5% in 1996 from 85. 1 % this year.
The world export crude price will average $17.60/bbl in 1994, $18.25/bbl in 1995, and $17.85/bbl in 1996. This year's average is estimated at $16.80/bbl.