Oil and Gas Prices Remain Low in Near Term

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Oil and Gas Prices Remain Low in Near Term

NEW YORK – Next year may not follow 2008’s lead as a record-setter for energy prices, as two government agencies are predicting lower prices for crude oil and gasoline.

A worsening economy continues to impact the price of energy commodities such as crude oil and natural gas, according to a report by The Energy Information Administration (EIA) that was cited by The Kansas City Star.

Its recently released revised outlook projected gas prices will average $2.37 per gallon in 2009, revised more than $1 lower from a month earlier projection of $3.56 per gallon, according to the report.

"It’s basically the economy," Tancred Lidderdale, an analyst for the EIA, told the paper. "All the grim economic news started rolling out in October."

Gas prices are expected to rise in early 2009 as the summer driving season approaches, But overall, lower overall gas prices are expected to prevail in 2009, the report stated.

Crude oil prices, which were previously expected to average $112 next year, were revised downward to $63.50 per barrel for 2009, according to the report.

The current U.S. and global economic downturn has led to a decrease in global energy demand, as well as the rapid downturn in price, the EIA reported. The global economy is expected to be the main factor driving energy prices.

U.S. retail gasoline demand slipped 1.3 percent last week compared to the previous week, according to a Retuers report that cited MasterCard Advisors’ weekly SpendingPulse report, which is based on aggregate sales activity in the MasterCard payments system coupled with estimates for all other payment forms.

Americans pumped an average of 8.898 million barrels of gas per day during the week ended Nov. 7. Demand for fuel was 4.2 percent below year-ago levels, the report stated.

Meanwhile, crude oil rebounded slightly from its $55 prices earlier this week, rising above $57 per barrel on news that OPEC may take action to compensate for the drop in demand, a separate Reuters report stated.

"The only thing supporting the market is the possibility of OPEC cuts at the end of the month, but the production cuts would probably only be in step with falls in demand," Christopher Bellew of Bache Financial told Reuters.