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%, 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 52 cents, or 0.5%, to $95.64 a barrel at 12:19 p.m. on the New York Mercantile Exchange. The U.S. grade dropped 3.9% to $93.46 in April. Brent oil for June settlement declined 38 cents, or 0.4%, to $105.08 on the London-based ICE Futures Europe exchange. The North Sea crude tumbled 7% 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% 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” as non-OPEC production rises, Lidderdale said.
U.S. production is projected to climb 7.9% this year to 12.02 million barrels a day, a total that includes oil, natural gas plant liquids, biofuels, other liquids and refinery processing gains. The country’s 2013 output forecast was increased 120,000 from last month’s report.
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% gain from 43.15 million in 2012. Demand will rise to 45.87 million in next year, the report showed.