(Updates with comment from EIA economist, supply and demand estimates beginning in fourth paragraph.)
July 8 (Bloomberg) -- The U.S. Energy Information Administration increased its 2014 and 2015 price forecasts for West Texas Intermediate and Brent crudes because of the upsurge of violence in Iraq.
WTI will average $100.98 a barrel this year versus the June projection of $98.67, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $95.17 in 2015, up from the previous month’s estimate of $90.92.
The EIA boosted the forecast for Brent to $109.55 for this year from $107.82. Next year’s forecast was raised to $104.92 from $101.92.
“Price forecasts were raised primarily because the problems in Iraq caused us to scale back our production projections,” Tancred Lidderdale, an economist with the EIA in Washington who helped write the report, said in a telephone interview.
U.S. crude output is projected to rise to 8.46 million barrels a day this year and 9.28 million in 2015, up from 7.44 million last year. That’s up from last month’s forecast of 8.42 million barrels a day this year and 9.27 million in 2015. U.S. crude production peaked at 9.6 million in 1970.
Total production of liquid fuels, including those associated with natural gas output, will average 13.63 million barrels a day in 2014 and 14.6 million next year, the report showed. That’s up from last month’s projections of 13.52 million this year and 14.51 million.
“Our projections for natural gas liquids have been rising steadily this year because plants are getting better at separating them and demand has grown,” Lidderdale said.
Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states.
The department lowered its forecast for global oil consumption this year to 91.62 million barrels a day from 91.79 million estimated last month. The forecast for 2015 production was reduced to 93.08 million from 93.12 million.
U.S. oil consumption will average 18.88 million barrels a day in 2014, down from last month’s forecast of 18.93 million. Next year demand is projected to climb to 18.95 million. The previous 2015 estimate was 18.98 million.
Regular gasoline will average $3.54 a gallon at the pump this year, up from an estimate of $3.50 in June, the EIA said.