EIA demand forecast sends crude prices lower

The price of crude oil was lower Tuesday, but only after morning gains, on a new report issued by the US Energy Information Administration cut its earlier forecast of how much demand there will be globally for oil this year.

The EIA said that the price of oil will average $42 per barrel this year and $53 per barrel next year as it cut its global demand forecast by 200,000 barrels per day from its February forecast.

It also said that the retail price of gasoline will likely average $1.96 per gallon this year and $2.18 per gallon in 2010.

The declines came ahead of Wednesday’s US inventories report from the EIA, which is expected to show that both oil and gasoline stockpiles were lower last week, while the earlier gains came on advances in equities markets and expectations that the Organization of Petroleum Exporting Countries will cut production quotas again when it meets this weekend.

April contracts for West Texas Intermediate crude were down $1.36 to $45.71 per barrel on the New York Mercantile Exchange, while Brent crude fell 17 cents to $43.96 per barrel on the ICE Futures Europe exchange in London.

Nymex April gasoline futures were down 4 cents to $1.30 per gallon while heating oil for April delivery dropped 2 cents to $1.20 per gallon.

Average at-the-pump prices for gasoline in the United States dropped nearly half a cent to $1.941 per gallon overnight, according to AAA, which puts them 2 cents higher than the same time last month.