The DOE's Energy Information Administration's monthly Short-Term Energy Outlook released Wednesday is based on predicted U.S. real gross domestic product (GDP) growth of 2.8 percent in 2010 and 2.3 percent in 2011, down from the previous Outlook's growth projections of 3.1 and 2.7 percent for 2010 and 2011, respectively. The 2011 world oil-consumption-weighted real GDP growth rate is also lowered, to 3.3 percent from the 3.6 percent level in last month's Outlook.
EIA now projects that on-highway diesel fuel retail prices, which averaged $2.46 per gallon in 2009, will average $2.93 per gallon in 2010 and $3.10 in 2011. Last month's projections were slightly higher, at $2.97 per gallon in 2010 and $3.14 in 2010.
The spot price for West Texas Intermediate crude oil, which averaged $77 per barrel in August, will average $77 per barrel in the fourth quarter of 2010 and $82 per barrel in 2011, according to the forecast, slightly below the numbers in last month's Outlook.
Despite the slight drop, EIA says its view of the world oil market remains largely unchanged. The projected gradual reduction in global oil inventories over the forecast period should lend support to firming oil prices. World oil prices are expected to rise slowly as global economic growth leads to higher global oil demand, growth in non-OPEC oil supply slows in 2011, and members of the Organization of the Petroleum Exporting Countries (OPEC) continue to support world oil prices.
EIA expects that regular-grade motor gasoline retail prices, which averaged $2.35 per gallon last year, will average $2.69 per gallon over the second half of 2010, down 7 cents per gallon from the average for the first half of the year. In 2011, higher projected crude oil prices combined with strengthening refiner margins are expected to boost annual average motor gasoline prices to $2.90 per gallon.