The EIA’s latest forecast, issued Tuesday, calls for WTI crude oil prices to rise to an average price of $98.67 a barrel in 2014. The prior forecast called for an average price of $96.59 a barrel. In 2013 the average per barrel price was $97.91.
Brent crude is now forecast to average $107.82 a barrel in 2014 compared with an average of $108.64 last year. The previous forecast called for a 2014 average price of $106.26 a barrel.
AAA warned motorists last week that gasoline prices are expected to remain high this summer and AAA predicted national average prices in the range of $3.55 to $3.70 a gallon. Last summer the range for a gallon of regular gas ran from $3.47 to $3.67.
Gasoline inventories on the east coast of the U.S. have surged and forward prices for July and August have moved into contango, where the forward prices are higher than the cash price. Typically when this situation occurs at this time of year, gasoline prices in the eastern part of the country don’t rise further and refining margins are capped. The price of imported crude should also begin to decline and the price for domestic crude going to the east coast should follow suit.
The decreases are very likely to be temporary however as producers maintain a tight watch over capital spending. As supplies dwindle later in the year, crude prices will rise again and gasoline prices are sure to follow.
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