Crude Prices Headed Lower

The U.S. Energy Information Administration (EIA) cut both 2014 and 2015 crude price forecasts, with output in North American increasing.

In its monthly Short-Term Energy Outlook, the agency projects West Texas Intermediate (WTI) will average $77.75 per barrel in 2015 vs. the prior projection in October of $94.58. The agency also lowered its Brent crude estimate for 2015 dramatically from $83.42 from $101.67.

U.S. production is poised to rise to 8.57 million barrels a day this year and 9.42 million in 2015, vs. 7.44 million last year.

Gasoline will likely average $2.94 a gallon in 2015, down $0.44, or nearly 13 percent lower than October's projection of $3.38.

The report goes on to state that the combination of increased supply, due mostly to fracking, combined with lowered global demand should continue to temper oil prices.

December crude oil futures sold off following the report, trading down 70 bps at $77.43.