Department of Energy forecasts oil prices
The U.S. Department of Energy forecasts oil prices to average $105 a barrel in 2011, and said there is a 25 percent chance that gasoline prices will exceed $4 a gallon this summer.
The Energy Information Administration ( EIA ), the department's statistical arm, raised its forecast for the average cost of crude oil to refiners to $105 per barrel this year, up $14 from earlier projections.
"Continuing unrest in Libya as well as other North African and Middle Eastern countries has led to the highest crude oil prices since 2008," the EIA said on Tuesday. "EIA expects continued tightening of world oil markets over the next two years, particularly in light of the recent events in North Africa and the Middle East, the world's largest oil producing region."
West Texas Intermediate ( WTI ) oil, the U.S. benchmark grade, will average $102 a barrel this year, up by $9 per barrel forecasted earlier, according to EIA. In 2012, WTI will average $105 a barrel.
WTI and other crude oil spot prices have risen about $15 per barrel since mid-February partly in response to the disruption of crude oil exports from Libya, the U.S. government's energy forecaster said.
The EIA's forecast assumes U.S. real gross domestic product ( GDP ) grows 3.3 percent in 2011 and 2.8 percent in 2012, while world real GDP (weighted by oil consumption) grows by 3.8 percent and 3.7 percent in 2011 and 2012, respectively.
On Tuesday, oil prices fell 0.64 percent to $104.77 a barrel in New York on conflicting and vague reports that Gaddafi and Libyan rebel groups may be in negotiations to settle on a peace deal.