The EIA's latest "Short-Term Energy Outlook" notes that oil prices are remaining high even though OPEC (Organization of Petroleum Exporting Countries) is producing oil at its highest levels since it began tracking oil quotas in 1982. World oil surplus production capacity is near its lowest point of the last 30 years, while petroleum inventories throughout the industrialized world remain below normal.

At the same time, the EIA has revised upward the projected world oil demand growth for 2004 to 3.2 percent higher than in 2003, with strong demand from China accounting for much of the upward revision (in the August report, the growth in world demand for oil was projected to be 2.5 percent in 2004). According to the EIA, this combination of factors provides "an extremely limited cushion in the event of unexpected world oil market disruptions."

Publication date: 09/20/2004