The Energy Information Administration decreased its 2014 price forecast for West Texas Intermediate crudes after the U.S. reached its highest monthly production in 27 years.
WTI will average $100.45 a barrel this year versus the July projection of $100.98, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. Brent will average $108.11, down from $109.55. Oil output was 8.5 million barrels a day in July, the most since April 1987, the EIA said.
The government reduced its forecasts for global demand for this year and next and said U.S. production will reach a 43-year high in 2015. WTI has dropped with Brent this month on speculation that U.S. air strikes in Iraq diminished the threat to oil supplies posed by insurgents. In Libya, the first oil cargo in a year was loaded from the port of Ras Lanuf today.
“The lower forecast reflects what happened in the market with a drop in Brent crude-oil prices, the improving market perception of reduced risk for Iraqi oil exports and the recent news on increasing Libyan oil exports,” said Tancred Lidderdale, an EIA economist who helped write the monthly report.
Global oil demand will average 91.56 million barrels a day, down from 91.62 million estimated last month, according to the department’s forecast. Consumption will be 92.96 million next year, down from the July outlook for 93.08 million.
U.S. crude production will reach 8.46 million barrels a day this year and 9.28 million in 2015, the highest annual average since 1972, according to the EIA.
Most of the global supply growth is “coming from countries outside of the Organization of the Petroleum Exporting Countries,” the EIA said in the report. “The United States and Canada account for much of this growth.”
The share of total U.S. petroleum and other liquids consumption met by net imports fell from 60 percent in 2005 to an average of 33 percent last year. The amount will drop to 22 percent in 2015, the lowest level since 1970, the EIA said.
The EIA increased its forecasts for next year’s oil prices. WTI will average $96.08 in 2015, up from the previous month’s estimate of $95.17. Brent was raised to $105 from $104.92.
Brent’s premium over WTI will average $7.66 this year and widen to $8.92 in 2015, according to EIA forecasts.