The U.S. Energy Information Administration reduced its crude-oil price forecast for 2013 because of falling futures and increasing production outside of the Organization of Petroleum Exporting Countries.
West Texas Intermediate oil will average $93.17 a barrel this year, down 75 cents, or 0.8 percent, from the April projection of $93.92, the EIA, the Energy Department’s statistical arm, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $92.25 in 2014, unchanged from the previous month’s estimate.
WTI crude for June delivery fell 54 cents, or 0.6 percent, to settle at $95.62 a barrel today on the New York Mercantile Exchange. The U.S. grade dropped 3.9 percent to $93.46 in April. Brent oil for June settlement declined $1.06, or 1.1 percent, to end today’s session at $104.40 on the London-based ICE Futures Europe exchange. The North Sea crude tumbled 7 percent to $102.37 last month.
“We cut the short-term outlook because of the recent weakness in prices,” said Tancred Lidderdale, an economist with the EIA in Washington who helped write the report. “Oil prices are certainly volatile in the short term.”
The EIA forecast that Brent, the benchmark grade for more than half the world’s crude, will average $105.89 a barrel in 2013, down $2.07 from last month’s prediction. The average cost of domestic and imported grades used by U.S. refiners will be $98.12 a barrel this year, down 64 cents from the April projection of $98.76, and $96.99 next year. Brent will drop to $100.75 a barrel next year.
Oil production outside of OPEC will rise 2.1 percent from 2012 to 53.85 million barrels a day in 2013, led by gains in the U.S. and Canada. The 2013 output projection was increased 80,000 barrels from April’s report.
“Oil prices should weaken in the longer term because of the rise in non-OPEC production,” Lidderdale said.
U.S. crude production is projected to climb 14 percent to 7.42 million barrels a day this year and then 10 percent to 8.17 million in 2014.
“With more oil coming from Texas and North Dakota, U.S. daily crude oil production in 2013 is expected 120,000 barrels higher than EIA previously forecast,” Adam Sieminski, the administrator of the EIA in Washington, said in a statement. “EIA’s projection for U.S. daily crude oil production in 2014 was revised up by 310,000 barrels and is expected to top 8 million barrels per day for the first time since 1988.”
OPEC members will produce 35.88 million barrels a day this year, the EIA said. Last month’s forecast was 35.98 million.
The 12-member group pumped 30.21 million barrels of crude oil a day in April, up from 29.93 million produced in March, EIA data showed. Saudi Arabia, the group’s biggest producer, pumped 9.2 million barrels of crude a day in April, up 100,000 from the previous month. OPEC’s non-crude oil liquids output was 5.77 million barrels a day last month.
The EIA lowered its forecast for global oil consumption this year to 89.93 million barrels a day from 90 million estimated last month. Demand will climb to 91.14 million barrels a day in 2014, down from the April estimate of 91.33 million.
U.S. oil consumption will average 18.63 million barrels a day in 2013, up from last month’s forecast of 18.62 million. Next year demand is projected to climb to 18.65 million.
Demand from the 30 members of the Organization for Economic Cooperation and Development will average 45.47 million barrels a day this year, down from 45.9 million last year. The forecast was cut from 45.54 million last month. The forecast for 2014 is 45.27 million.
The OECD doesn’t include developing countries such as China, India and Brazil. The EIA left its forecast of consumption by non-OECD countries at 44.46 million barrels a day, unchanged from last month. That would be a 3 percent gain from 43.15 million in 2012. Demand will rise to 45.87 million in next year, the report showed.