Tight global oil supply is likely to keep U.S. crude prices above $35 a barrel for the rest of 2004, U.S. Energy Information Administration chief Guy Caruso told Congress on Wednesday.
"While our forecast has crude oil prices easing slightly through third quarter, the world market will still be tight, as world petroleum demand picks up seasonally in the fourth quarter, increasing the potential for unexpected upward price pressure (on oil) this winter," Caruso told lawmakers at a House hearing on the petroleum markets.
So far this year, the average price for U.S. benchmark West Texas Intermediate (WTI) is $36.85 a barrel, using EIA figures.
On Wednesday, WTI crude futures prices on the New York Mercantile Exchange were down 45 cents to $39.20 a barrel.
"We continue to expect that the additional crude oil production, which producers with excess capacity have recently committed to provide, would allow for building of crude oil and product inventories," Caruso said.
The producers Caruso refers to are those OPEC members with ability to produce more than they have been recently, mainly Saudi Arabia.
Saudi Arabian Oil Minister Ali al-Naimi on Wednesday said OPEC would proceed with plans to increase production by 500,000 barrels per day in August.
Separately, even though U.S. gasoline prices have declined for six weeks in a row, Caruso said pump costs may rise again toward the end of the summer.
"With continuing tight gasoline markets reflected by low inventories, we could see increasing potential for higher prices in August as demand peaks before the summer driving season ends," he said.
Caruso also repeated his warning that, with refineries focusing on making gasoline, the U.S. may enter the upcoming fall and winter season with lower heating oil inventories that could result in higher heating fuel bills for consumers.
