US Government Expects Oil Price To Stay High

By Douglas A. McIntyre Published Nov 6, 5:40PM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

The Energy Information Adminstration branch of the US government released its forecast for the rest of this year and next. The analysis shows that high oil prices are expected to continue.

Among the observations in the report:

Global oil markets will likely remain stretched, as world oil demand has continued to grow much faster than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC), putting pressure on OPEC and inventories to bridge the gap. Additional fundamental factors contributing to price volatility include ongoing geopolitical risks, OECD inventory tightness, and worldwide refining bottlenecks.

This situation has resulted in West Texas Intermediate (WTI) crude oil prices staying well over $80 per barrel for most of October and even topping $90 per barrel towards the end of the month. If oil producers increase output, as we have 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. Fourth quarter 2007 WTI prices are expected to average $87 per barrel.

Total U.S. petroleum consumption is expected to increase by 0.5 percent in 2007 and 1.0 percent in 2008, despite the higher oil and petroleum product prices.

World oil consumption in the fourth quarter is projected to be 1.8 million barrels per day (bbl/d) above fourth-quarter 2006 levels. EIA projects that world oil consumption will increase by 1.5 million bbl/d in 2008,

The Outlook assumes that China, the United States, Russia, and Middle Eastern countries will continue to be the main drivers of increased global oil use.

Now, there’s something for your tax dollars.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.