2011 in Review

Figure 1. U.S. Energy Consumption and Rig Counts in 2011

In 2011, the monthly average high of $109.53 per barrel in April followed the disruption in Libyan crude oil production. In contrast, the monthly average low price in September of $85.52 was influenced by deteriorating expectations of world economic growth and the European Union’s debt crisis.

Tension in the oil-producing regions of the Middle East and Africa continued to exert upward pressure on oil prices during the last three months of the year. This pressure was offset by the restoration of Libyan oil output, which has exceeded expectations—increasing from an average of 350,000 barrels per day (BPD) in October to an estimated 550,000 BPD in November.

Analysts expect Libyan crude oil production to rise to an average of 900,000 BPD during the first quarter 2012 and to 1.2 million BPD by the fourth quarter 2012, compared with a pre-disruption output of 1.65 million BPD.

World crude oil consumption grew by approximately 1 million BPD in 2011 to 88.1 million BPD. This growth is expected to accelerate with consumption reaching 89.4 million BPD in 2012 and 90.9 million BPD in 2013.

U.S. domestic crude oil production increased by an estimated 90,000 BPD in 2011 to 5.57 million BPD. A 370,000-BPD increase in the lower-48 onshore production was partly offset by a 240,000-BPD decline in the Gulf of Mexico and a smaller decline in Alaskan production. This rising production trend is driven by increased oil-directed drilling activity, particularly in onshore shale formations.

The number of onshore oil-directed drilling rigs reported by Baker Hughes increased from 777 at the beginning of 2011 to 1,193 on Dec. 29, 2011. The average price for West Texas Intermediate crude oil for 2011 was $95 per barrel. The U.S. Energy Information Administration forecasts that West Texas Intermediate crude oil spot prices will average approximately $100 per barrel in 2012.