By Margot Habiby and Tina Seeley Oct. 7 (Bloomberg) -- The U.S. government cut its forecasts for the prices of crude oil, gasoline and winter heating fuels as global demand slows with the staggering economy. Prices will still be significantly higher than last year. West Texas Intermediate crude oil, the U.S. benchmark, will average $112 a barrel in 2008, the Energy Department said in its monthly Short-Term Energy Outlook. The forecast is down 3.3 percent from $115.81 a barrel estimated last month, the report from the department's Energy Information Administration showed. ``The global economy as well as the U.S. economy will play a key role in determining oil prices,'' Howard Gruenspecht, acting administrator of the Energy Information Administration, said at a press conference today in Washington. Crude oil rose to a record $147.27 a barrel on July 11 on the New York Mercantile Exchange. Oil for November delivery fell $6.07, or 6.5 percent, to $87.81 a barrel yesterday. It rose 2.8 percent to $90.28 today. Global economic growth presented ``the greatest uncertainty'' in the agency's projections, Gruenspecht said. ``Clearly there's been a lot of new thinking about the world economy, even in the last two weeks.'' The forecast has world growth at 3 percent this year and 2.8 percent in 2009, significantly below the 4 percent growth in 2007, he said. U.S. oil demand will average 19.8 million barrels a day this year, down 830,000 barrels a day from 2007. This year's demand forecast was reduced 270,000 barrels from last month. OECD Demand Demand among the 30-member Organization for Economic Cooperation and Development will fall 1.07 million barrels to 48.07 million barrels a day, the Energy Department said. The OECD doesn't include developing countries such as Brazil, China and India. Consumption by non-OECD countries will rise 1.4 million barrels a day to 38.07 million barrels. Global oil consumption will average 86.14 million barrels a day this year, down 340,000 barrels from estimates in September, the report showed. Demand will average 86.92 million barrels a day in 2009, down 380,000 barrels from last month's forecast. Regular gasoline will average $3.56 a gallon at the U.S. pump this year, down 1.4 percent from $3.61 estimated in last month's report. Prices averaged $2.81 a gallon in 2007. The department cut its estimate of winter fuel costs, though homeowners will still pay more than last year. The heating season runs from October through March. ``People will be paying more to heat their homes this year,'' Gruenspecht said. The cost will be ``less than it would have been if we were having this discussion three months ago.'' Heating Costs Heating oil users will see their bills rise 23 percent to an average $2,388 this winter from $1,939 a year earlier, the report showed. The department last month estimated costs of $2,524 over the heating season. Heating oil will average $3.89 a gallon, up 17 percent. That compares with an estimate of $4.13 last month. Homeowners in the U.S. using natural gas will see average heating costs for the season of $1,010, up 18 percent from $855 last winter. The department last month forecast that the average cost to homeowners would be $1,017 this winter. Wholesale natural gas at the benchmark Henry Hub in Louisiana will average $9.67 per thousand cubic feet this year, down from $9.71 estimated last month. Prices will be up 35 percent from last year's average price of $7.17. Gas will average $8.17 in 2009, down from $8.55 estimated a month ago. Natural-gas consumption this year will rise 2.4 percent this year, the department said. Demand for the heating and power-plant fuel in 2009 will rise 1.9 percent. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Tina Seeley in Washington at tseeley@bloomberg.net.

Source