U.S. Energy Department Reduces 2012 Oil Price Forecast

The U.S. Energy Department reduced its crude-oil price projection for 2012 as production increases and slower economic growth curbs fuel use.

West Texas Intermediate oil will average $92.83 a barrel this year, down 4.1 percent from the June forecast of $96.80, the department’s Energy Information Administration said in its monthly Short-Term Energy Outlook. The U.S. benchmark crude grade will average $88.50 in 2013, down 8.8 percent from last month’s estimate of $97. The 2011 average was $94.86.

The average cost of domestic and imported grades used by U.S. refiners will be $97.89 a barrel in 2012, down from last month’s projection of $102. The estimate for 2013 is $93.08, down from $101.56.

Global oil production will rise 2.1 percent from last year to 89.05 million barrels a day in 2012, down from the June estimate of 89.06 million. The 2013 estimate is 89.47 million, down from the previous estimate of 89.92 million.

Iran’s oil output will fall by about 1 million barrels a day by the end of 2012 as a result of the European Union sanctions that became effective on July 1, the EIA predicted. Output from the country will fall by 200,000 more barrels a day in 2013. Iran production levels stood at 3.6 million barrels a day at the end of 2011, according to the report.

Regular gasoline, averaged nationwide, will average $3.49 a gallon at the pump this year, down 2 percent from a projection of $3.56 in June, the report showed.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net