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US EIA raises energy price forecasts

HOUSTON (ICIS news)--The Energy Information Administration (EIA) on Tuesday revised its forecast for US benchmark crude oil pricing in 2008, predicting the average cost of West Texas Intermediate (WTI) crude oil to be $101/bbl for 2008 as a whole, compared with predictions of $94 in March.

The EIA cited rising world oil consumption and low surplus capacity combined with investment in commodities for the readjustment in its forecast.

However, the administration said it is forecasting a decline in crude prices to $92.50/bbl on average for next year, but that estimate also represents an increase from the agency’s month-earlier forecast of $86/bbl on average for 2009.

“The increase in non-Organization of the Petroleum Exporting Countries (OPEC) production in the second half of the year, however, is expected to contribute to increases in OPEC surplus crude oil production capacity and ease upward price pressures toward the end of the year,” the administration said, supporting its crude oil price decline prediction for next year.

Based on the projections of weak economic growth and record high crude oil and product prices, the EIA predicted US petroleum consumption to fall by 210,000 bbl/day this year, accounting for projected increases in domestic ethanol production.

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