U.S. Crude Oil Prices May Fall 8% Next Year, Australia Says

By Angela Macdonald-Smith

Sept. 22 (Bloomberg) -- U.S. crude oil prices may fall 8 percent next year, a bigger decline than predicted three months ago, because of slowing demand, the Australian government's commodities forecaster said.

West Texas Intermediate, the U.S. benchmark crude variety, may average $97.95 a barrel in 2009, down from a projected $107.11 this year, the Australian Bureau of Agricultural and Resource Economics said today in a report. In June, it estimated the average price would fall 1.8 percent to $119.40 in 2009, from $121.54 this year.

Crude prices have fallen about 29 percent since reaching a record $147.27 a barrel in New York on July 11 amid concerns that slowing economic growth and high prices will curb demand. Production from the Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, should rise next year as new projects start up, the bureau said.

``The combination of increased OPEC production and slower economic growth is expected to continue for the rest of 2008 and into 2009,'' the Canberra-based bureau said in the report.

The bureau also reduced its forecast for Australia's output of crude oil and condensates in the year ending June 30, 2009, to 26.7 billion liters, or 460,000 barrels a day, from 27.6 billion. Export earnings from oil and condensates may rise by 18 percent to A$12.4 billion ($10.3 billion), down from a projection three months ago for a 46 percent jump to A$15.3 billion.

Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, Houston-based Apache Corp. and Coogee Resources Ltd. are among companies due to start operating oil projects this financial year. Closely held Coogee said in July its Montara project to develop oil fields in the West Timor Sea was running about four months late because of equipment and labor shortages.

Natural gas production may advance 10 percent this fiscal year to 48.5 billion cubic meters, up from an earlier forecast of 45.9 billion, the bureau said. Liquefied natural gas output may rise 15 percent to 16.9 million metric tons, with the expansion of the Woodside-operated North West Shelf venture. The value of LNG exports may gain 50 percent to A$8.8 billion, down from an earlier estimate for a 67 percent increase.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net