Fuel and Oil
3/10/2010
Crude Oil, Diesel Predicted to Rise Slightly
The federal government's monthly energy outlook predicts crude oil prices will rise to over $80 a barrel this summer, and that diesel prices will average near $3 a gallon over the course of 2010.
The U.S. Energy Information Administration, part of the Department of Energy, said in its Short-Term Energy Outlook this week that although spot crude oil prices continue to fluctuate on a daily basis, the EIA's projections for West Texas Intermediate crude oil spot prices have remained relatively stable over the last four months. EIA expects WTI prices to average above $80 per barrel this spring, rising to an average of about $82 per barrel by the end of the year and to $85 per barrel by the end of 2011.
Projected annual average retail diesel fuel prices are $2.96 and $3.14 per gallon, respectively, in 2010 and 2011. In comparison, it averaged $2.46 per gallon in 2009.
Energy prices are driven largely by economic growth fueling demand. Projected economic growth this year is higher in this forecast, with U.S. real gross domestic product (GDP) growing by 2.8 percent and world oil-consumption-weighted real GDP growing by 3.4 percent, compared with 2.3 percent and 2.7 percent growth, respectively, in last month's Outlook. The 2011 forecast for real GDP growth is relatively unchanged at 2.6 percent and 3.5 percent for the United States and the world, respectively.
EIA's more optimistic updated expectation for global economic growth during 2010 drives the 2010 forecast for oil consumption growth up to 1.5 million barrels per day from 1.2 million in last month's Outlook. This increased growth in 2010 oil consumption supports a firming of crude oil prices at above $80 per barrel this summer and accommodates a further drawdown of commercial oil inventories, says the agency.
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