HOUSTON --The Energy Information Administration (EIA) on Tuesday revised its price forecast for US benchmark crude oil in 2008, predicting the average cost of West Texas Intermediate (WTI) crude oil at $101/bbl, compared with its March prediction of $94.
The EIA cited rising world oil consumption and low surplus capacity combined with investment in commodities as the reasons for the new forecast.
The administration forecasted a decline in crude prices to $92.50/bbl on average for next year, compared with the agency s month-earlier forecast of $86/bbl.
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.
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.
The EIA said it took into account increases in domestic ethanol production. In 2008, an additional 64 new ethanol production facilities are expected to come online, adding to the 36 plants or plant expansions that started production in 2007.
Domestic ethanol production has increased from an average of 314,000 bbl/day during the summer of 2006, to 418,000 bbl/day during the summer of 2007, and is projected to average 550,000 bbl/day this summer, the EIA said.
Despite dampened domestic petroleum consumption forecasts, the EIA said it expected world oil consumption to grow by 1.2m bbl/day in 2008, citing continued growth in China, India, Russia, and the Middle East oil-exporting countries .
For natural gas, the administration said it expects the average for Henry Hub spot prices to be $8.59/m Btu, an increase of 5% from March predictions of $8.18/m Btu. The EIA estimated in February that 2008 average natural gas prices would be $7.83/m Btu.
The Henry Hub spot price averaged $9.74/m Btu in March, nearly $1.00 per m Btu more than the average spot price in February, marking the first month since December 2005 that Henry Hub spot prices averaged more than $9/m Btu.
However, as seasonal demand wanes, the EIA said spot prices are expected to decline before they begin to rise again toward a winter peak.
The administration also raised its outlook for the 2009 average natural gas price to $8.32/m Btu, up 4.7% from its month earlier forecast of $7.95/m Btu.
The EIA attributed the recent upward price shift to the drop off in liquified natural gas (LNG) from year-ago levels, high oil prices and the drawdown in storage to the lowest levels in four years.
The EIA cited rising world oil consumption and low surplus capacity combined with investment in commodities as the reasons for the new forecast.
The administration forecasted a decline in crude prices to $92.50/bbl on average for next year, compared with the agency s month-earlier forecast of $86/bbl.
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.
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.
The EIA said it took into account increases in domestic ethanol production. In 2008, an additional 64 new ethanol production facilities are expected to come online, adding to the 36 plants or plant expansions that started production in 2007.
Domestic ethanol production has increased from an average of 314,000 bbl/day during the summer of 2006, to 418,000 bbl/day during the summer of 2007, and is projected to average 550,000 bbl/day this summer, the EIA said.
Despite dampened domestic petroleum consumption forecasts, the EIA said it expected world oil consumption to grow by 1.2m bbl/day in 2008, citing continued growth in China, India, Russia, and the Middle East oil-exporting countries .
For natural gas, the administration said it expects the average for Henry Hub spot prices to be $8.59/m Btu, an increase of 5% from March predictions of $8.18/m Btu. The EIA estimated in February that 2008 average natural gas prices would be $7.83/m Btu.
The Henry Hub spot price averaged $9.74/m Btu in March, nearly $1.00 per m Btu more than the average spot price in February, marking the first month since December 2005 that Henry Hub spot prices averaged more than $9/m Btu.
However, as seasonal demand wanes, the EIA said spot prices are expected to decline before they begin to rise again toward a winter peak.
The administration also raised its outlook for the 2009 average natural gas price to $8.32/m Btu, up 4.7% from its month earlier forecast of $7.95/m Btu.
The EIA attributed the recent upward price shift to the drop off in liquified natural gas (LNG) from year-ago levels, high oil prices and the drawdown in storage to the lowest levels in four years.
