The pullback comes one day on the heels of the contract closing at a two-month high.
According to the Energy Information Administration's monthly report, oil will average $42 a barrel this year and $53 next year. A month ago by contrast, the EIA, the Energy Department's statistics arm, had said that it expected prices to average $43 and $55,
The pullback comes one day on the heels of the contract closing at a two-month high.
According to the Energy Information Administration's monthly report, oil will average $42 a barrel this year and $53 next year. A month ago by contrast, the EIA, the Energy Department's statistics arm, had said that it expected prices to average $43 and $55, respectively.
On the New York Mercantile Exchange, crude for April delivery was down $1.30, or 2.8%, at $45.77 a barrel at last check. Earlier, the contract had surged to an intraday high of $48.32, powered by speculation the Organization of Petroleum Exporting Countries intends to cut production quotas at a meeting later this week.
"The market was way overbought and ahead of itself," said Phil Flynn, vice president at Alaron Trading.
Flynn called the government's price outlook "a sober reminder that demand is still bad and may not recover anytime soon."
"The lower demand expectations kind of rained on the parade of bullish optimism," he added.
Even so, the U.S. forecast fits in with a steady drumbeat of gloomy economic forecasts that has dominated the market mood in recent days. In one of the latest, the managing director of the International Monetary Fund said the global economy will contract this year.
Dominique Strauss-Kahn's comments followed a similar prediction from the World Bank, which said in a March 8 report that the international economy was likely to shrink for the first time since World War II.
"The global economic contraction continues to depress energy demand," the EIA said in the monthly report.
World oil consumption is projected to decline by 1.4 million barrels a day in 2009, the EIA said in. That's roughly 200,000 barrels a day more than the EIA had projected a month ago.
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