After moving lower in 2001, crude oil prices moved higher in 2002 reaching over $30 per barrel in September 2002. Higher prices were supported by a number of factors. One was the ongoing U.S. war on terrorism and rising tensions with Iraq. There was the likely potential that military action would be taken against Iraq that would disrupt the supply of crude oil to the market. With that issue still not settled as 2002 drew to a close, crude oil prices continued to find support. Another positive factor for crude oil prices was the fact that global economic growth appeared to be improving and that was expected to continue into 2003.

While there were factors supporting higher prices, there were also factors working against them. The Organization of Petroleum Exporting Countries (OPEC) after a meeting in 2001 agreed that production of oil would be cut. The question was whether the non-OPEC countries would act to support OPEC and cut production of whether they would go ahead and try to gain market share at the expense of OPEC. In 2002 it appeared that the non-OPEC countries had opted to gain share by increasing production. The high prices for crude oil seen in September 2002 also caused a further increase in production as OPEC production increased. Iraq increased oil production. In the face of increased production as well as somewhat reduced tensions with Iraq, oil prices move somewhat lower in late 2002.

The U.S. Energy Information Administration reported that U.S. domestic field production of crude oil in October 2002 was estimated at 5.8 million barrels per day, down 3 percent from a year earlier. In the January-October 2002 period, domestic production averaged 5.8 million barrels per day, close to unchanged from 2001 and 2000. For all of 2001, domestic production averaged 5.8 million barrels per day. U.S. domestic production of crude oil has been in decline for several years. In 1986 domestic production averaged 8.68 million barrels per day. By 2001 that average had dropped by 33 percent.

The year 2002 saw an active debate over the merits of opening more of Alaska to exploration and drilling for oil. In October 2002, Alaskan oil production averaged 981,000 barrels per day, an increase of 10 per cent from a year earlier. In the January-October 2002 period, Alaskan oil production averaged 989,000 barrels per day, up 4 percent from the same period of 2001. For all of 2001, Alaskan oil production averaged 963,000 barrels per day. Production of oil in Alaska has been declining. In 1988 it was 2.02 million barrels per day. By 2001 oil production had declined 52 percent.

The U.S. is dependent on imports of crude oil to meet its energy needs. Imports are in an increasing trend. In October 2002, crude oil imports averaged 9.28 million barrels, up almost 1 percent from a year earlier. In the January-October 2002 period, U.S. crude oil imports averaged 9.01 million barrels per day, down 4 percent from the same period in 2001. For all of 2001, imports outside of the Strategic Petroleum Reserve averaged 9.32 million barrels per day. In 1986 imports averaged 4.13 million barrels per day.

The U.S. exports small amounts of crude oil. In October 2002, exports averaged 21,000 barrels per day while in the January-October 2002 period, they averaged 11,000 barrels. In the same period of 2001 they averaged 22,000 barrels while in 2000 the average was 58,000 barrels. In 1986 imports averaged 154,000 barrels.

U.S. stocks of crude oil at the end of October 2002 were estimated at 880 million barrels. At the end of October 2001 stocks were 858 million barrels. In October 2002, stocks of oil in the Strategic Petroleum Reserve were 589 million barrels.

Futures Markets

Futures and options on light sweet crude oil are traded on the New York Mercantile Exchange (NYMEX) along with other energy products like heating oil, unleaded gas, and natural gas. London's International Petroleum Exchange (IPE) trades Brent crude oil futures and options. The IPE also trades gasoil, natural gas and fuel oil. The Singapore International Monetary Exchange (SIMEX) trades Brent crude oil futures.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here

Related Links

Seasonal Chart (Light Crude)

Seasonal Chart (Brent Crude)