EIA Says Crude and Gasoline to Drop as Output Advances

The U.S. Energy Information Administration cut 2014 and 2015 crude price forecasts because of rising output and reduced demand.

West Texas Intermediate will average $94.58 a barrel in 2015 versus the September projection of $94.67, the EIA said today in its monthly Short-Term Energy Outlook. The agency trimmed its Brent crude forecast for next year to $101.67 from $103. It also cut its gasoline price outlook.

The Energy Department’s statistical arm forecast production of 8.54 million barrels a day this year, up from 7.45 million last year, and 9.5 million in 2015, the most since 1970. This year’s projection was revised up 10,000 from the September report, while the 2015 forecast was reduced 30,000.

“The highest previous annual U.S. production level was 9.6 million barrels a day in 1970,” the agency said in the report.

Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states. U.S. crude production jumped to 8.7 million barrels a day in September, the most since July 1986, the EIA said.

WTI will average $97.72 a barrel this year, down from last month’s projection of $98.28, the report showed. Brent is forecast to average $104.42 this year, lower than the September estimate of $106. WTI settled at $90.34 a barrel yesterday on the New York Mercantile Exchange. Brent settled at $92.79 on the London-based ICE Futures Europe exchange.

“Weakening global demand helped North Sea crude oil spot prices fall to an average of $97 per barrel in September, the first month Brent prices have averaged below $100 per barrel in more than two years,” the EIA said.

Cheaper Gasoline

Retail gasoline is forecast to average $3.45 a gallon this year and $3.38 in 2015. That’s down from last month’s forecasts of $3.46 and $3.41.

Oil production outside of the Organization of Petroleum Exporting Countries will rise 3.4 percent from 2013 to 55.98 million barrels a day this year, up 70,000 barrels from the September estimate.

OPEC members will produce 35.78 million barrels a day this year, the EIA said. Last month’s forecast was 35.77 million.

The department cut its forecast for global oil consumption this year to 91.47 million barrels a day from 91.55 million last month. The forecast for 2015 demand was cut to 92.71 million from 92.89 million.

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