The U.S. Energy Information Administration increased its crude-oil price forecast for 2013 as heating demand boosted consumption of distillates and liquefied petroleum gas.
West Texas Intermediate oil will average $93.25 a barrel this year, up 8 cents from the May projection of $93.17, the EIA, the Energy Department’s statistical arm, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will fall to $91.96 in 2014. Total liquid fuels consumption rose 180,000 barrels a day in the first quarter from a year earlier, the EIA said.
“Much of that increase was due to weather, with heating degree days in the Northeast 21 percent higher than the mild first quarter seen last year,” the EIA said in the report.
WTI crude for July delivery fell 85 cents, or 0.9 percent, to $94.92 a barrel at 12:20 p.m. on the New York Mercantile Exchange. The U.S. grade dropped 1.6 percent to $91.97 in May. Brent oil declined $1.45, or 1.4 percent, to $102.50 on the London-based ICE Futures Europe exchange. The North Sea crude tumbled 1.9 percent last month.
The EIA forecast that Brent, the benchmark grade for more than half the world’s crude, will average $104.65 a barrel in 2013, down from last month’s prediction of $105.89. The average cost of domestic and imported grades used by U.S. refiners will be $98.48 a barrel this year, up from the May projection of $98.12, and $96.68 next year, down from $96.99. Brent will drop to $99.75 a barrel in 2014, down from $100.75.
Oil production outside of OPEC will rise 1.19 million barrels a day from 2012 to 53.91 million in 2013, led by gains in the U.S. and Canada. The 2013 output projection was increased from 53.85 million in May.
U.S. crude production is projected to climb to 7.29 million barrels a day from 6.5 million in 2012, a decrease from last month’s projection of 7.42 million. Output will rise to 8.09 million next year.
“Drilling in tight oil plays in the onshore Williston, Western Gulf and Permian Basins is expected to account for the bulk of forecast production growth over the next two years,” the EIA said in the report.
U.S. oil consumption will average 18.64 million barrels a day in 2013, up from last month’s forecast of 18.63 million. Next year demand is projected to slip to 18.63 million, unchanged from the May report.
The EIA raised its forecast for global oil consumption this year to 90.03 million barrels a day from 89.93 million last month. Demand will climb to 91.22 million barrels a day in 2014, up from the May estimate of 91.14 million.
Demand from the 30 members of the Organization for Economic Cooperation and Development will average 45.46 million barrels a day this year, down from 45.95 million last year. The forecast was cut from 45.47 million last month. The forecast for 2014 is 45.25 million.
The OECD doesn’t include developing countries such as China, India and Brazil. The EIA raised its forecast of consumption by non-OECD countries to 44.57 million barrels a day, up from last month’s projection of 44.46 million. That would be a 3.1 percent gain from 43.22 million in 2012. Demand will rise to 45.97 million in next year, the report showed.
“In April 2013, estimated total liquids fuels consumption in non-OECD countries reached 44.5 million barrels per day, which was higher than consumption in OECD countries (44.3 million barrels per day) for the first time in history,” the EIA said. “On an average annual basis, non-OECD use of liquid fuels is forecast to exceed OECD levels in 2014.”
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