Feds lower projections for crude oil prices

Federal energy analysts predict average crude oil prices will hover around the $50-per-barrel mark through next year, lower than previously thought. 

The Energy Information Administration (EIA) said on Wednesday that West Texas Intermediate (WTI) crude prices, the benchmark for American crude, will average $49 per barrel this year and $54 per barrel in 2016. Those figures are respectively $6 per barrel and $8 per barrel lower than previous estimates. 

{mosads}EIA said it changed its forecast because of a handful of factors, including the possibility that Iranian crude oil could enter the market after sanctions on the country are lifted. 

The agency said it’s also concerned about slow economic growth in crude oil markets, growing supply and increasing oil inventory around the world.

But EIA notes its projection “remains subject to significant uncertainties: the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth and the responsiveness of non-OPEC production to low oil prices.”

Crude oil was trading around $40.60 on Wednesday. Experts said the price could eventually dip below $40, with analysts telling MarketWatch on Tuesday that they’re concerned about high global supply levels and a dip in Chinese demand for oil. 

Gasoline prices tend to follow the cost of Brent Crude oil, an international benchmark. EIA expects Brent price fluctuations to track alongside WTI through next year, keeping retail prices relatively low.

Even so, the administration said gasoline prices are “elevated” right now because of strong demand in the U.S. and overseas and oil refinery outages in California.