Oil Supply Up, Price Down Through 2009

SAN FRANCISCO (MarketWatch) — The world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand, the U.S. Energy Information Administration said Tuesday.

Oil prices, however, will remain higher than last year’s. The barrel, which averaged $72 in 2007, is expected to average about $86 in 2008 and $82 in 2009. Oil topped $100 a barrel early this year.



Higher crude prices will push gasoline prices to as high as $3.40 per gallon this spring, the EIA said in its monthly report, and this year’s average gas prices will exceed $3 a gallon.

The ease of the oil market mainly comes from higher supplies, according to EIA. Surplus production capacity is projected to grow from the current level of less than 2 million barrels a day to more than 4 million barrels a day by the end of 2009.

MarketWatch