Oil Prices Surge, Expected to Remain High
After climbing to $90 per barrel last month, the price of West Texas Intermediate (WTI) crude oil is expected to remain high, according to the Energy Information Administration (EIA).
After climbing to $90 per barrel last month, the price of West Texas Intermediate (WTI) crude oil is expected to remain high, according to the Energy Information Administration (EIA).
WTI prices are expected to average $87 per barrel in the fourth quarter, according to EIA. If oil producers increase output, as EIA has assumed, crude oil prices should ease somewhat. Nevertheless, monthly average prices are expected to exceed $80 per barrel over the next several months and remain well above $70 per barrel throughout the forecast period.
Contributing to the price increases are global oil markets stretched by demand growing faster than supply outside countries outside of the Organization of the Petroleum Exporting Countries (OPEC), which is putting pressure on OPEC to increase production, EIA says.
EIA predicts that total U.S. petroleum consumption will increase by 0.5 percent in 2007 and 1.0 percent in 2008, despite the higher oil and petroleum product prices. Continued economic growth and colder average temperatures this winter than last winter combine to push demand higher.
Meanwhile, working natural gas in storage reached a record 3.51 trillion cubic feet (tcf) as of October 26. The abundant level of storage and limited fuel switching capability have mitigated the impact of the recent price increases in petroleum markets on natural gas prices, according to EIA. The Henry Hub spot price is expected to average about $7.30 per thousand cubic feet (mcf) in 2007 and $8.01 per mcf in 2008.
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