As oil creeps ever closer to the century-mark, the U.S. government predicted Tuesday that prices are likely to remain high amid high demand and tight output. Crude prices jumped to a record of $98.17/bbl. in NYMEX electronic trading on Wednesday after news of an attack on a pipeline in Yemen. "Rising oil consumption and the realization that additional OPEC production may not be sufficient to arrest the inventory decline are keeping markets firm," the Energy Information Administration, the statistical bureau of the Department of Energy, said in its monthly short-term energy outlook. The agency believes oil producers will increase production, which should result in somewhat of an easing in prices, but it nevertheless expects monthly average prices to exceed $80/bbl. over the next several months, and $87/bbl. over the fourth quarter. OPEC has committed to raising output by 500,000 bbls./day starting this month. Non-OPEC supply was also expected to rise through 2008. The EIA raised its 2008 forecast for U.S. oil prices to $80/bbl. from $73.50. The EIA expects U.S. petroleum consumption to increase by 0.5% in 2007 and 1% in 2008, while world oil consumption rises by 1.5M/bbls. per day. Commercial crude inventories, it noted, have been declining since May, a trend the EIA expects to continue through the forecast period. It plans to release its next update December 11.
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