Crude oil will rise close to US$30 a barrel by the end of the summer, spurred by an Iraqi export halt and OPEC's decision this week to keep output quotas unchanged after cutting them twice this year, the Energy Department said.
The price of West Texas Intermediate, the benchmark crude oil grade that's traded on the New York futures market, will rise from the current US$28 a barrel as inventories decline because of the cuts by OPEC and a monthlong suspension of exports by Iraq.
"During the first half of the year, we had Iraqi production running and didn't really feel the effects of the OPEC cuts," Dave Costello, an Energy Department economist who was the lead author of the report, said in an interview. "The impact of the OPEC cuts, especially the April one, will show up in coming months, lending support to prices."
Rising demand will also help send inventories lower, the report said. World demand in 2001 is forecast to grow by 1.2 million barrels a day. That's slower than the June forecast of 1.3 million barrels and the 1.6 million predicted in February.
"They are more bullish than I am," said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc in St. Louis. "They are looking for strength in the economy and demand that I don't see in the market."
While oil prices may rise, retail gasoline in the US will probably decline, according to the monthly Short-Term Energy Outlook, written by the Energy Department's Energy Information Administration. Pump prices nationwide are expected to average US$1.42 a gallon by the end of the year, down 28 cents from the record monthly high of US$1.70 in May.
Natural gas demand in the US is projected to grow by 1.6 percent this year, though a larger 3.6 percent rise in production will help keep prices in check, the report said. Gas, currently trading at about US$3.18 per million British thermal units, is expected to average about US$3.30 this quarter and US$4.37 for the year. Gas storage injections rose to records from April through June to levels about 5 percent above the five-year average.
"There is enough gas around now," Costello said. "They could forgo injections for the next couple of weeks and even if demand shot up due to weather, there would be plenty." While demand from electric utilities during heat waves will increase competition for gas, "the likelihood of any significant summer jump in gas prices now seems remote," the report said.
Prices are down from a record US$10.10 per million Btu in December.
Gas production is expected to rise 2.9 percent in 2002, and while demand will jump 4.4 percent, high storage levels will help keep the average price next year at about US$3.40 per million Btu.
Electricity demand growth will slow to about 2.2 percent this year from growth of 3.7 percent last year because of the slowing economy, the report said. Industrial demand is expected to be lower than it was last year. Still, the summer is forecast to be warmer than normal, and that will boost electricity in the period from April to September by 1.9 percent from the same period last year.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by