A new forecast is calling for lower fuel prices, due in large part to lower prices for crude oil.
The U.S. Energy Department’s Energy Information Administration’s new Short-Term Energy Outlook projects diesel, which averaged $3.97 per gallon in 2012, will average $3.93 per gallon this year and $3.76 per gallon in 2014. The new forecast is three cents lower for 2013 and six cents lower for next year, compared to the previous prediction.
EIA’s forecast for regular gasoline is an average of $3.34 per gallon in the fourth quarter of 2013. The annual average regular gasoline retail price, which was $3.63 per gallon in 2012, is expected to be $3.52 per gallon in 2013 and $3.40 per gallon in 2014.
Part of this is due to the expectation of lower crude oil prices. Brent crude oil spot prices have fallen from a recent peak of $117 per barrel in early September to $108 per barrel at the end of the month, as some crude oil production restarted in Libya and concerns over the conflict in Syria moderated.
EIA expects the Brent crude oil prices to continue to weaken, averaging $107 per barrel during the fourth quarter of 2013 and $102 per barrel in 2014.
Projected West Texas Intermediate crude oil prices should average $101 per barrel during the fourth quarter of 2013 and $96 per barrel during 2014.
Global consumption is expected to grow by 1 million barrels per day in 2013 and by another 1.2 million barrels per day in 2014, with China, the Middle East, Central & South America, accounting for much of the consumption growth.
Despite the increase in demand, this is expected to result in less demand for crude from OPEC member nations while non-OPEC supply growth is North America is expected to increase by 1.4 million barrels per day and 1.1 million barrels per day in 2013 and 2014, respectively, due to continued production increases in U.S. onshore tight oil formations and from Canadian oil sands.