NEW YORK (AP) -- Pump prices will average $3.70 per gallon this spring and summer with a barrel of oil averaging $102 this year, the U.S. Department of Energy said Tuesday.
Conflict in the Middle East and fighting in Libya prompted government analysts to raise expectations for gasoline prices by 50 cents a gallon for the peak driving season in the Energy Information Administration's monthly Short-Term Energy Outlook. The EIA boosted its per-barrel oil estimate by $9 for the year.
EIA sees pump prices peaking at $3.75 a gallon in June. But its report says there is "significant uncertainty surrounding the forecast" and pump prices could spike above $4 this summer, which would threaten the all-time high of $4.11 a gallon reached in July 2008.
On Tuesday the national average for a gallon of regular hit $3.52, according to AAA, Oil Price Information Service and Wright Express. That's 40 cents higher than a month ago and 76 cents above a year ago. After settling at $105.44 a barrel on Monday, benchmark crude lost about 80 cents in Tuesday afternoon trading.
The Energy Department expects world oil markets to tighten over the next two years with the average oil price rising to $105 a barrel in 2012. It said uncertainty about oil production in North Africa and the Middle East, the world's largest oil-producing region, is a major factor.
The government also expects oil production lost from Libya to be covered by increased production in other OPEC countries. Saudi Arabia, the biggest OPEC contributor, has said it will cover any shortfall caused by strife in the region.
Oil Price Forecast
Oil Price Forecast
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price Forecast
From March 9 Morgan Stanley Global Research "The Commodity Call":
Our economists’ bottom line: The recent supply-induced rise
in oil prices, if sustained, dampens global growth. However, it
will not derail the global cycle. Rather, they see short and
medium-term risks skewed more towards meaningfully higher
inflation than substantially lower growth.
We are cautious, however, as the situation in MENA has not
come to a resolution yet. Additional protests and disruptions
could lift prices materially higher, challenging growth. Even in
the best of scenarios, spare capacity is back in focus. We have
argued since late-2009 that oil prices would move higher as the
market acknowledged the tightening trajectory of spare
capacity through 2015, and prices would respond in-kind,
moving higher to ration demand.
The more recent increase in oil prices, from $100/bbl at
end-January to near $115/bbl today is largely a reflection of
supply shut-ins and civil unrest in the MENA region – Libya
specifically. Estimated production losses from Libya range
between 600 to 1,200 kb/d (0.9-1.7% of global crude supply).
These events have not only taken barrels away from the
market, but more importantly, have shifted the focus back to
spare capacity – if Libya is offline and OPEC increases
production to offset lost volumes, spare capacity would fall to
3.6 mmb/d, a marked decline from the 5.3 mmb/d we started
2011 with.
Our economists’ bottom line: The recent supply-induced rise
in oil prices, if sustained, dampens global growth. However, it
will not derail the global cycle. Rather, they see short and
medium-term risks skewed more towards meaningfully higher
inflation than substantially lower growth.
We are cautious, however, as the situation in MENA has not
come to a resolution yet. Additional protests and disruptions
could lift prices materially higher, challenging growth. Even in
the best of scenarios, spare capacity is back in focus. We have
argued since late-2009 that oil prices would move higher as the
market acknowledged the tightening trajectory of spare
capacity through 2015, and prices would respond in-kind,
moving higher to ration demand.
The more recent increase in oil prices, from $100/bbl at
end-January to near $115/bbl today is largely a reflection of
supply shut-ins and civil unrest in the MENA region – Libya
specifically. Estimated production losses from Libya range
between 600 to 1,200 kb/d (0.9-1.7% of global crude supply).
These events have not only taken barrels away from the
market, but more importantly, have shifted the focus back to
spare capacity – if Libya is offline and OPEC increases
production to offset lost volumes, spare capacity would fall to
3.6 mmb/d, a marked decline from the 5.3 mmb/d we started
2011 with.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price Forecast
The Energy Information Administration recently increased their latest projection for crude, and now expect prices to average about $105 per barrel in 2011.
And gasoline prices are going to rise right alongside crude oil...
The EIA said today that gasoline prices jumped 34 cents per gallon this week. On February 28, the EIA reported the second largest one-week increase in gasoline prices since 1990.
Sadly, this is just the beginning of your painful fill-ups...
Gasoline prices averaged $3.52 per gallon this week. The EIA is expecting gasoline prices to average $3.71 per gallon during this year's driving season, even exceeding $4 per gallon during the peak of the driving season (April through September).
If the Saudis fall victim to the same geopolitical turmoil dominating the Middle East... we'll be wishing for $4 per gallon.
And gasoline prices are going to rise right alongside crude oil...
The EIA said today that gasoline prices jumped 34 cents per gallon this week. On February 28, the EIA reported the second largest one-week increase in gasoline prices since 1990.
Sadly, this is just the beginning of your painful fill-ups...
Gasoline prices averaged $3.52 per gallon this week. The EIA is expecting gasoline prices to average $3.71 per gallon during this year's driving season, even exceeding $4 per gallon during the peak of the driving season (April through September).
If the Saudis fall victim to the same geopolitical turmoil dominating the Middle East... we'll be wishing for $4 per gallon.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group