U.S. Reduces 2013 Average WTI Oil-Price Forecast to $91.92

(Updates with Chinese imports in 14th paragraph.)

March 12 (Bloomberg) -- The U.S. Energy Information Administration reduced its crude-oil price and global consumption projections for 2013.

West Texas Intermediate oil will average $91.92 a barrel this year, down 1 percent from the February estimate of $92.81, the Energy Information Administration, the Energy Department’s statistical arm, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $92.17 in 2014, unchanged from the previous month’s estimate.

“We only reduced our forecast for prices over the next couple months,” said Tancred Lidderdale, an economist with the EIA in Washington who helped write the report. “We left our projections for the later part of the year and 2014 alone. Prices were expected to fall, but it happened a bit faster than we expected a month ago.”

WTI crude for April delivery rose 48 cents, or 0.5 percent, to $92.54 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 27. The contract dropped to $90.12 on March 4, the lowest settlement since Dec. 24. Brent oil for April settlement dropped 57 cents, or 0.5 percent, to $109.65 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to WTI shrank to $17.11, the least since Jan. 30.

“Prices were higher at this time last month,” Lidderdale said. “We missed the timing of the drop in prices by a bit.”

Brent Prices

Brent, the benchmark grade for more than half the world’s crude, will average $108.33 a barrel in 2013, down $1 from last month’s forecast. The average cost of domestic and imported grades used by U.S. refiners will be $96.62 a barrel this year, down 88 cents from the February projection of $97.50. Brent will drop to $100.75 a barrel next year and the average cost for refineries will slip to $96.91 in 2014, the EIA said.

The spread between Brent and WTI, which will average about $16 a barrel this year, will narrow to $9 in 2014. The Brent premium will shrink because increasing pipeline capacity will lower the cost of shipping oil from the central U.S. to refineries on the Gulf Coast, according to the report.

The EIA decreased its forecast for global oil consumption this year to 90.13 million barrels a day from 90.21 million estimated last month. World demand will climb to 91.53 million in 2014.

Non-OPEC Production

Oil production outside of the Organization of Petroleum Exporting Countries will rise 2.2 percent to 53.8 million barrels a day this year. The U.S. and Canada account for almost 75 percent of the gain, the EIA said. That’s up from last month’s projection of 53.66 million. World output will climb an additional 2.7 percent to 55.24 million in 2014.

U.S. crude output will climb to an average 7.31 million barrels a day this year, up from 6.47 million in 2012, according to the report. The 2013 estimate was increased 0.8 percent from 7.25 projected in February. Production will surge 7.8 percent in 2014 to 7.88 million barrels a day, which is up from last month’s estimate of 7.82 million.

“Higher U.S. oil production means America will need less imported oil,” Adam Sieminski, the administrator of the EIA in Washington, said in a statement following the report. “After reaching a record 60 percent of domestic oil demand in 2005, net oil imports next year are forecast to fall to 32 percent of consumption, the lowest level since 1985.”

Production has increased as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.

Chinese Demand

“The trend of falling U.S. oil imports and rising Chinese oil demand is moving China closer to passing the United States as the largest global net oil importer,” Sieminski said. “Net oil imports for the United States and China were on par at 6 million barrels a day in December 2012, according to the most recent data from the EIA and China’s General Administration for Customs.”

China’s crude processing fell to the lowest level in four months in February as the nation celebrated the week-long Lunar new year holiday, figures today from the China Federation of Logistics and Purchasing showed. Apparent demand, or domestic crude processing plus net imports, was 10.2 million barrels a day, the least since October, according to data compiled by Bloomberg. The figure was up 4.4 percent from a year ago.

OPEC members will produce 36.03 million barrels a day this year, the EIA said. Last month’s forecast was 36.37 million.

The 12-member group pumped 30.01 million barrels of crude oil a day in February, less than the 30.03 million produced in January, data showed. Saudi Arabia, the group’s biggest producer, pumped 9 million barrels of crude a day in February, down from 9.1 million the previous month. OPEC’s non-crude oil liquids output was 5.69 million barrels a day last month.

--Editors: Margot Habiby, Charlotte Porter