The U.S. Energy Information Administration expects Brent crude oil spot prices, which averaged $112 per barrel last year, to fall to an average of $105 per barrel this year and down to $99 per barrel in 2014, the EIA stated in its recent short-term energy outlook.
West Texas Intermediate crude oil, which averaged $18 a barrel in 2012, is predicted to fall to an average of $16 a barrel in 2013 and to $8 a barrel in 2014 as new pipeline capacity lowers the cost of moving mid-continent crude to Gulf Coast refining centers.
Markets are expected to loosen this year and next, as increasing global supply offsets higher oil consumption globally.
World oil supply this year is predicted to increase by 1.0 million barrels per day and next year by 1.7 million barrels a day.
The U.S. is expected to increase its crude oil production from 6.4 million barrels a day last year to 7.3 million a day this year and to 7.9 million barrels per day in 2014, EIA stated. The 6.4 million barrels in 2012 was the highest annual average rate of production since 1997 and an increase of 0.8 million barrels a day over 2011, EIA pointed out.
Improved rig efficiencies, or the number of wells a rig can drill in a year, have increased U.S. production in Texas, North Dakota and a handful of other states.
Onshore crude oil production is expected to account for the bulk of the U.S. production increase through 2014, but increases in offshore production are expected to come from drilling in the Gulf of Mexico.
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