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The U.S. Energy Information Administration increased its West Texas Intermediate crude price forecast for 2013 after prices surged in July.

WTI, the grade traded in New York, will average $96.96 a barrel this year, up from the July projection of $94.65, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $92.96 in 2014, up from the previous month’s estimate of $91.96.

The EIA forecast that Brent, the benchmark grade for more than half the world’s oil, will average $105.80 a barrel in 2013, up $1.12 from last month’s prediction, and $99.75 in 2014. The average cost of domestic and imported grades used by U.S. refiners will be $103.06 a barrel this year, up $2.41 from the July estimate of $100.65, and $98.43 next year.

“Projections were changed because oil prices surged in the first three weeks of July,” said Tancred Lidderdale, an economist with the EIA in Washington who helped write the report. “Prices climbed more than we forecast.”

Crude for September delivery fell $1.26, or 1.2 percent, to settle at $105.30 a barrel on the New York Mercantile Exchange. WTI climbed 8.8 percent in July. Brent oil for September slipped 52 cents, or 0.5 percent, to end the session at $107.91 on the London-based ICE Futures Europe exchange.

Narrower Spread

The forecast spread between Brent and WTI is about $9 a barrel for 2013, down from last month’s projection of $10. The spread, which surged to a monthly average of $21 in February, fell to an average $3 In July. The WTI discount should widen to $6 by the end of the year, the EIA said.

Falling inventories at Cushing, Oklahoma, the delivery point for New York futures, helped spur July’s rally and reduce the gap between WTI and Brent, Lidderdale said. Supplies at the hub dropped to 42.1 million barrels in the week ended July 26, the least since April 20, 2012, EIA data show.

Pipelines in Alberta were shut after flooding caused a leak in June. The opening of a new unit at the BP Plc refinery in Whiting, Indiana, and the completion of additional pipeline and rail capability is providing outlets for surging supplies in the central U.S. and increased WTI prices.

“The spread between WTI and Brent has come in a great deal because of what’s occurred in the midcontinent over the last couple of months,” Lidderdale said. “This has contributed to a draw at Cushing the size of which we haven’t seen in quite awhile.”

U.S. Production

U.S. crude production jumped to an average 7.5 million barrels a day in July, the EIA said. The agency forecast output of 7.4 million in 2013 and 8.2 million in 2014, both about 100,000 barrels a day higher than last month’s forecast.

Crude output in July was “the highest for any month since 1991,” Adam Sieminski, the administrator of the EIA, said in a statement. “EIA expects that U.S. monthly crude-oil production will exceed U.S. crude-oil imports as early as October, the first time this will have happened since February 1995.”

Oil production outside of the Organization of Petroleum Exporting Countries will rise 2.4 percent from 2012 to 53.99 million barrels a day this year, led by gains in the U.S. and Canada. The 2013 output projection was increased 50,000 barrels from July’s report.

OPEC Output

OPEC members will produce 35.79 million barrels a day this year, the EIA said. Last month’s forecast was 35.95 million.

The 12-member group pumped 29.96 million barrels a day of crude in July, down from 30.02 million produced the prior month, EIA data showed. Saudi Arabia, the group’s biggest producer, pumped 9.6 million barrels a day last month, unchanged from June. OPEC’s non-crude oil liquids output was 5.83 million barrels a day last month.

The EIA decreased its forecast for global oil consumption this year to 89.99 million barrels a day from 90.05 million estimated last month. Demand will climb to 91.21 million in 2014, down from the July estimate of 91.29 million.

U.S. oil consumption will average 18.69 million barrels a day in 2013, up from last month’s forecast of 18.66 million. Next year demand is projected to climb to 18.7 million.

“Since reaching 12.5 million barrels per day in 2005, total U.S. fuel net imports, including crude oil, have been falling and are expected to average less than 6 million barrels per day next year,” Sieminski said.

Revised Demand

Consumption from the 30 members of the Organization for Economic Cooperation and Development will average 45.61 million barrels a day this year, up from 45.93 million last year and from last month’s forecast of 45.53 million. The prediction for 2014 is 45.43 million.

The OECD doesn’t include developing countries such as China, India and Brazil. The EIA reduced its forecast of consumption by non-OECD countries to 44.38 million barrels a day from 44.52 million in July. That would be a 3.3 percent gain from 42.97 million in 2012. Demand is expected to rise to 45.77 million next year.

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