Energy Department Raises 2013 Oil Price Forecast

The U.S. Energy Department increased its forecasts for 2013’s crude-oil price and global demand and reduced projections for U.S. oil production.

West Texas Intermediate oil will average $92.81 a barrel this year, up 3.7 percent from the January projection of $89.54, the Energy Information Administration, the department’s statistics arm, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $92.17 in 2014, up from the previous month’s estimate of $91.

Brent, the benchmark grade for more than half the world’s crude, will average $109.33 a barrel in 2013, up 4 percent from last month’s forecast of $105.17. Brent will slip to $100.75 next year, according to the report.

The spread between Brent and WTI, which will average $16.52 a barrel this year, will narrow to $8.58 in 2014.

The average cost of domestic and imported grades used by U.S. refiners will be $97.50 a barrel in 2013, up 3.4 percent from the January projection of $94.27, the EIA said in the report.

Crude oil for March delivery advanced 48 cents, or 0.5 percent, to settle at $97.51 a barrel on the New York Mercantile Exchange. Brent oil for March settlement gained 53 cents to $118.66 a barrel on the London-based ICE Futures Europe exchange.

Worldwide Demand

The department increased its forecast for global oil consumption this year to 90.21 million barrels a day from 90.11 million estimated last month. Demand will be 1.2 percent higher than last year’s average of 89.16 million. Global consumption will climb to 91.62 million in 2014.

U.S. domestic oil production will reach 7.25 million barrels a day, the EIA said, down from January’s estimate of 7.32 million. The 2013 output forecast is 13 percent higher than last year’s level of 6.44 million barrels a day.

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