In 2004, a noticeable rise in prices of oil and oil products, that was observed on the domestic market and could be explained largely by growth of world prices and the expansion of capacity of oil exports in the first months of 2005, changed by their decline. In March, however, the rise in prices resumed.
As a result, the producers’ prices for oil, diesel fuel and fuel oil reached in August of 2005 hit the highest level over the whole period of reforms. The price of automobile fuel, for example, which reached its height in November 2004 (USD 353.9/t), amounted to USD 346.3/t in August, that is exceeded the level of the end of 2004. This year the gas prices noticeably exceeded those observed in the period prior to devaluation, and reached in August USD 12.2 per 1 thou. cub. m (Table 3).
Table Domestic Prices of Oil, Oil Products and Natural Gas in 2002-2005.
(Average Producer’s Prices, $/t) 2002 2003 2004 2005 2005 2005 Decem- Decem- Decem- March June July August ber ber ber Oil 60.7 70.1 123.5 120.7 150.4 152.4 170.Automobile fuel 168.8 236.9 333.1 287.2 316.4 331.6 346.Diesel fuel 153.8 214.3 364.3 347.5 347.4 377.0 394.Fuel oil 66.1 66.0 69.4 75.4 117.8 131.1 147.Gas, $/ thou. cub.m 5.9 4.4 10.5 12.1 11.9 11.9 12.Source: calculated according to the data of the Federal State Statistics Service.
The high level of world oil prices was the cause of considerable growth of revenues from export (Fig. 1, 2). By contrast, in January-July 2005 in comparison with the respective period of the prior year the oil export in physical terms lowered by 0,6%, while the oil products – increased by 15,1% (Table 4). The share of exports in the commodity resources of fuel oil made up 62,6%, diesel fuel – 56,8%, automobile fuel – 19,0% (for comparison: in 1999 the share of exports in the production of fuel oil made up only 7,2%). In contrast to the previous several years that characterized by the noticeable growth of import of oil products, this year we observe its reduction. In January-July 2005 the import of oil products lowered by 64% in comparison with the respective period of the previous year.
It is to be noted that in January-July 2005 the import of automobile fuel reduced by 97% as compared to the previous year, while the share of import in the resources of gasoline was [close to zero point (for comparison: in the first half of 1998, that is prior to ruble devaluation, the share of import in the resources of gasoline made up 8,7%).
Table Export of Oil, Oil Products and Natural Gas from Russia in 2002-2005, in % to the Respective Period of the Previous Year 2002 2003 2004 January-July Oil, total 113,9 117,8 115,0 99,including:
to countries – not CIS members 109,9 118,9 116,3 99,to CIS countries 137,3 112,4 108,3 100,Oil products, total 118,5 103,6 105,5 115,including:
to countries – not CIS members 119,1 102,6 104,9 116,to CIS countries 102,8 132,3 117,9 86,Gas, total 102,4 102,0 105,5 106,Source: Federal State Statistics Service.
As the an analysis of the situation on the world oil market shows, a number of factors will make for maintenance in the short run of the high level of oil prices. First, as is forecasted, the growth of the world oil demand will be rather high. According to the forecast of the U.S. Department of Energy – the world’s leading organization in the field of analysis and forecasting the development of the world oil market – in 2006 the world oil demand will grow by 1,9 million barrels a day, or by 2,2% as compared to 2005 (in 2005 the expected growth of oil demand will make 1,5%). According to expectations, the oil demand in China in 2006 will remain stable and will grow by 600 thou. Barrels a day, or by 8,7% as compared to the previous year. Second, it is forecasted that an increase in oil production in the countries – not OPEC members will not allow to satisfy the world demand. As forecasted, in the oil production beyond OPEC countries, will grow by 0,9 million barrels a day, as compared with the prior year. Considerable influence on the dynamics of oil production beyond OPEC countries is exerted by decline in the oil production growth rates in Russia and drop in production in the Gulf of Mexico as a result of passed hurricanes. Third, as expected the idle oil production capacities, which are reduced of late, will remain at a low level. At present only Saudi Arabia has sufficient quantity of idle oil production capacities. Fourth, because of small number of available capacities, it is expected that tension will remain in such sectors as cargo carriage and processing. Fifth, geopolitical risks, such as unstable situation in Iraq and possible problems in Nigeria and Venezuela, will keep high uncertainty on the world oil market.
The considerable growth of oil demand will be determined by high growth rates of the world economy. According to the forecast of the U.S. Department of Energy, in 2006 the economic growth rates in OECD countries will make 1,9% (in 2004 they were 3,1%, in 2005, by estimate, - 2,3%). As expected, in the U.S. the growth rates in 2006 will be 3,3 % (in в 2004 they were 4,2%, in 2005, by estimate, - 3,5%). In absolute figures (as forecasted) the world oil demand will grow from 83,7 million barrels a day in 2005 to 85,6 7 million barrels a day in 2006 or by 1,9 million barrels a day (as expected, in 2005 the world oil demand increment will make 1,2 million barrels a day). In relative terms, in 2006, as compared to the prior year, the world oil demand will grow by 2,2% (in 2005, by estimate, an increment will be 1,5%), that is the world growth rates of oil demand will be somewhat higher, chiefly because of the higher growth rates of oil consumption in Asian countries, which are not OECD members. A considerable part of the forecasted rate of growth of consumption in 2006 will fall on the countries - OECD members, first of all for the USA, however, major increment will fall on the countries which are not OECD members. In the countries, which are not OECD members, the demand will grow by 1,2 million barrels a day, or by 3,5 % as compared with the prior year. Half of this increment will fall on China.
As forecasted, in 2006, in comparison with the previous year the world oil production will grow by 1,4% (as expected, in 2005 an increment of the world production will reach 1,6%). It is forecasted an increase of oil production in the U.S. (by 5,2% in comparison with 2005) and Canada. The growth of oil production in the U.S. will be observed for the first time over the last few years, which obviously is associated with an influence of high prices on oil. Partly, a considerable expected increment of oil production in the U.S. in 2006 is associated with the low level of oil production in the Gulf of Mexico in 2005, because of Katrina and Rita hurricanes (as expected, this year, in comparison with the previous year, the total contraction of oil production in the U.S. will make 5,1%). Next year, further reduction of the level of oil p-ro9duction is expected in the oil fields of the North Sea. The growth of oil production beyond OPEC countries will not be intensive. As a result of lowering of oil production in the Gulf of Mexico as a consequence of happened hurricanes, reduction of oil production in the North Sea and slowing down the growth of oil production in Russia, it is forecasted that in 2005 production of oil beyond OPEC countries will grow on average only by 0,1 million barrels a day, in 2006 – by 0,million barrels a day. In addition, the world idle oil production capacities are currently at the lowest level over the passed three decades.
As a result, according to the basic version of the latest (October 2005) forecast of the U.S. Department of Energy, the world oil price, defined as average oil price imported into the U.S. in 2006 will be at extremely high level and will amount on average USD 57.5/barrel. With account of actually established ratio between the price of oil Brent and an average price of oil imported into the U.S., the price of oil Brent in 2006 will make in this case about USD 62.5 /barrel. (Table 5).
Table Forecast of the World Oil Price in 2005-2006, $/barrel 2002 2003 2004 2005 (forecast) (forecast) Price of oil imported into the U.S.*, $/barrel 23.7 27.7 36.0 50.3 57.Price of oil Brent 25.0 28.8 38.2 54.7 62.* Producer’s prices in deals with oil refineries.
Источник: U.S. Department of Energy/Energy Information Administration, IEA, author’s estimates.
Most of other organizations also predicts maintenance in the short run of extremely high level of world oil prices. Foe example, the latest forecasts of the international monetary Fund, Centre for Global Energy Studies, Economist Intelligence Unit and some other organizations are in the range of USD 55-60/barrel. Some organizations make lower forecasts for 2006, close to USD 50 /barrel. In parallel with that, most organizations believe that in a distant prospect oil prices will be considerably lower in comparison with the current high level.
According to IET forecast, in the following three months (November 2005 – January 2006) the price of oil Brent will make on average USD 62.6 /barrel., which is close to the short-term forecast of the U.S. Department of Energy.
Нефть Мазут Source: calculated according to the data of the Federal State Statistics Service.
Fig.1. Average Prices of Oil and Fuel Oil Exports in 1996-2005, $/t Fig.2. Oil and Oil Products Exports in Value and Physical Terms in 1997-2005, mln t, USD million.
45 0 Млн. т (левая шкала) Млн. долл (правая шкала) Source: calculated according to the data of the Federal State Statistics Service.
Thus, according to the latest forecasts, the world price of oil Brent will be maintained in the short run on a very high level and may make USD 50-62.6/barrel. This will correlate with the price of Russian oil Urals at about the level of USD 46-58/barrel. Alongside with that, considerable degree of uncertainty still possible in the future dynamics of the world oil prices, associated with the effect of a авг.окт.сен.апр.ноя.янв.окт.дек.дек.мар.май.июн.мар.май.июл.фев.июл.янв.янв.янв.янв.янв.янв.янв.янв.янв.июл.июл.июл.июл.июл.июл.июл.июл.июл.number of factors, relating to both questions of demand (growth rates of the world economy, in particular, of China Economy, weather conditions), and supply (oil production). The great part in the future dynamics of the world oil prices will play the policy of the countries – OPEC members. At the last OPEC conference, in September 2005, the countries – OPEC members - announced about their intention to use the idle oil production capaсities by million barrels a day, should the need arise, within three months, starting from October 1, 2005. In practice, however, it’s only Saudi Arabia, which has a considerable idle production capaсities. Besides, the narrow market of heavy sulfurous oil may prevent considerable increase in OPEC countries’ oil production.
All this allow to expect retaining of favorable external conditions in the short run to form the revenue side of the government budget, replenishment of the Stabilization fund and development of the O&G sector Russian economy.
Yu.N. Bobylev Foreign trade In August 2005 Russia continued its vigorous growth of basic foreign trade indicators. As before, the major factors that stimulated this remain high world prices for basic commodities of Russian export and growth of the domestic effective demand.
At the 6th ministerial WTO conference scheduled for mid-December of 2005, Russia will not be able to join the World Trade Organization.
In August 2005 the Russian foreign trade turnover, calculated upon the balance of payment methodology, reached USD 32.5 bn, which is greater by 1,2% compared to July 2995, and - by 30,5%, compared to August 2004.
The volume of Russian exports in August 2005 made up USD 22 bn, which is by 2,3% greater than in the previous month, and by 31% greater than in August 2004. To far-abroad countries there were exported goods amounted to USD 18.9 bn (by 35,1% greater 8than a year before), to CIS countries – USD 3.1bn (growth by 10,5%).
2000 2001 2002 2003 2004 Balance Export Import Source: Central Bank of the RF Figure 1. Major Indices of the Russian Foreign Trade (bn dollars) The volume of imports in the RF in August 2005 amounted to USD 10.5 bn, which is less by 0,9% than in July 2005, and greater by 27,4% than in August 2004. From the far-abroad countries there were imported goods to the amount of USD 8.6 bn (greater by 31,7% than in August 2004), from CIS countries - by USD 1.9 bn (growth by 11%).
Jul Jul Jul Jul Jul Jan Jan Jan Jan Jan Jan Apr Okt Apr Okt Apr Okt Apr Okt Apr Okt In August 2005 the Russia’s foreign trade surplus amounted to USD 11.5 bn, which is by 34,5% greater than a year before, and by 5,5% greater than in July this year. With the far-abroad countries the trade surplus amounted USD 10.3 bn (by 5,4% greater than in August 2004), with CIS countries – USD 1 billion 153 million (growth by 5,2%).
As before, the growth of export is determined for Russian exporters largely by favorable state of affairs on the world market.
According to estimates of the Bank of Russia, in August 2005, as compared to the previous month, the world prices with account of the Russian export structure as aggregated by goods, including about 70% of its cost went up on average by 4,7%. In January-August 2005, in comparison with the respective period of 2004, they were higher on average by 37%.
In August 2005, as compared to the previous month, the prices for oil products grew on average by 8,8% (gasoline went down by 13,1%, diesel fuel - by 9,3%, fuel oil - by7,1%). In January-August 2005 in comparison with the respective period of 2004 they were higher on average by 46% (diesel fuel went up 52%, fuel oil - by 42%, gasoline – by 28%).
In August 2005, as compared to the previous month, the prices for natural gas in Europe went up by 2,2%, in the U.S. - by 26,2%. In January-August 2005, in comparison with the respective period of 2004, the prices for natural gas in Europe went up by 47%, in the U.S. – by 23%.
In August 2005, as compared to the previous month, the world prices for Russian fuel and energy products went up on average by 5,7%. In January-August 2005, in comparison with the respective period of 2004 they were higher by 45%.
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