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EIA forecasts oil prices for 2014

OGFJ Staff

In its “Short-Term Energy Outlook,” the US Energy Information Administration forecast that prices for crude and oil-based fuels will continue to fall through the end of the year and will average lower in 2014.

The EIA lowered its projection for the average price of regular gasoline for the fourth quarter of 2013, cutting it by 10 cents to $3.24 per gallon Since the beginning of September, the weekly national average price of gasoline has dropped by more than 40 cents..

For the year, EIA expects gasoline to average $3.50 per gallon, down 13 cents from last year’s average. The agency expects it to fall further in 2014, averaging $3.39.

The price cuts come as US oil production soars. In October, the country produced more crude than it imported, for the first time since February 1995. The EIA forecasts that US oil production will jump by 1 million barrels per day next year, reaching 8.5 million barrels per day.

As the US pumps more oil, the EIA forecasts that the crude oil prices will decline. West Texas Intermediate crude, the US benchmark, will drop from an average of $97.74 per barrel this year to $95 per barrel in 2013. Brent crude, the international benchmark, is projected to fall from $108.01 to $103.

As a result, the EIA predicts that the WTI-to-Brent discount, which reached an average of $20 per barrel in February, will narrow to $8 in 2014. Natural gas prices, however, are projected to rise. The Henry Hub spot price, the US natural gas benchmark, is forecast to rise from $3.68 per million British thermal units this year to $3.84 per million British thermal units next year.

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