EIA Increases Price Forecasts for Benchmark Crudes

The U.S. Energy Information Administration increased its 2014 and 2015 price forecasts for West Texas Intermediate and Brent crudes.

WTI will average $96.59 a barrel this year, up from the April projection of $95.60, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $90.92 in 2015, up from the previous month’s estimate of $89.75.

The EIA raised the forecast for Brent to $106.26 for this year from $104.88. Next year’s forecast was increased to $101.92 from $100.92.

U.S. crude production jumped to an average 8.3 million barrels a day in April, the most since March 1988, the EIA said. The agency forecast output of 8.5 million this year and 9.2 million in 2015, up from 7.4 million last year. The 2015 projection would be the highest annual average since 1972.

Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states.

“EIA expects oil production growth, primarily from increased output in the tight oil formations in North Dakota and Texas, to continue through 2015,” Adam Sieminski, the administrator of the EIA, said in a statement.

The department lowered its forecast for global oil consumption this year to 91.56 million barrels a day from 91.61 million estimated last month. The forecast for 2014 production was reduced to 91.58 million barrels a day from 91.78 million.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Richard Stubbe, Bill Banker

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