Worldwide Rig Counts Up

    In the first quarter of 2011, worldwide and U.S. rig counts were up 20.5 percent and 27.6 percent, respectively, over first quarter 2010 levels. The U.S. Energy Information Administration (EIA) expects oil markets to continue to tighten over the next two years given expected robust growth in world oil demand and slow growth in supply from non-OPEC countries. Total world oil consumption is forecast to grow by an annual average of 1.5 million barrels per day in 2011 and 2012. World consumption of crude oil and liquid fuels grew by approximately 2.7 percent in 2010 to a record high of 86.7 million barrels per day. 

The EIA forecasts that world liquid fuels consumption will grow by 1.7 percent in 2011 and an additional 1.8 percent in 2012, with the largest increases coming from China, Brazil and the Middle East. To meet the projected demand growth, there will need to be both a drawdown of inventories and significant increases in the production of crude oil and non-crude liquids from OPEC member countries.

The U.S.’s total consumption of liquid fuels increased by 2.0 percent to 19.1 million barrels per day in 2010 and is projected to increase by 1.1 percent in 2011 and another 0.9 percent in 2012. Transportation fuels (motor gasoline, distillate fuel and jet fuel) are expected to account for 75 percent of the growth in consumption in 2011 and almost all the growth in 2012.

Crude oil prices are at their highest levels since 2008. West Texas Intermediate (WTI) crude oil spot prices averaged $89 per barrel in February and $103 per barrel in March. Projected WTI prices average $106 per barrel in 2011 and $114 in 2012, increases of $5 per barrel and $9 per barrel, respectively, from last month’s projections.