NEW YORK--U.S. oil futures rallied to a one-month high Tuesday after government forecasters lowered their estimate for domestic crude-oil production this year and next.
Light, sweet crude for May delivery settled up $2.12, or 2.1%, at $102.56 a barrel on the New York Mercantile Exchange, the highest settlement since March 7. Brent crude on the ICE futures exchange rose $1.85, or 1.8%, to $107.67 a barrel.
The U.S. is likely to produce 8.37 million barrels a day of crude oil this year, the U.S. Energy Information Administration said Tuesday. The projection is down from 8.39 million barrels a day in the EIA's previous forecast but still up from 7.44 million barrels a day in 2013. In 2015, the EIA forecasts production of 9.13 million barrels a day of oil, down from 9.16 million barrels a day previously.
U.S. oil production has been robust because of hydraulic fracturing and horizontal drilling techniques that have enabled energy producers to tap into supplies trapped in shale-oil fields. However, frigid weather this winter halted some production.
On the consumption side, the agency raised its 2014 forecast slightly from 18.89 million to 18.9 million barrels a day.
The EIA also increased its projection for prices this year. The U.S. oil benchmark will average $95.60 a barrel this year, 27 cents more than what was predicted in the EIA's March report and $2.31 less than last year's average.
The report, which was released at noon EDT, was "certainly a supportive element" for prices, said Tim Evans, analyst at Citi Futures Perspective.
Traders are also looking ahead to weekly EIA data on domestic oil and petroleum-product supplies, set to be released Wednesday at 10:30 a.m. EDT.
Analysts expect the report to show that U.S. crude-oil inventories rose by one million barrels, on average, in the week ended April 4, according to a Wall Street Journal survey.
Demand for crude oil is typically lower at this time of year as refineries shut down units to perform seasonal maintenance.
Gasoline stockpiles are expected to fall by 700,000 barrels, while stocks of distillates, which include heating oil and diesel, are expected to decline by 100,000 barrels.
Refinery use is seen rising 0.1 percentage point to 87.8% of capacity, based on EIA data.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 7.1-million-barrel build in crude stocks, according to industry sources. The group also said gasoline supplies fell by 3.7 million barrels in the week and distillate stocks rose by 293,000 barrels, according to the sources.
Front-month May reformulated gasoline blendstock, or RBOB, settled up 5.41 cents, or 1.9%, at $2.9801 a gallon, the highest settlement price since March 4. May diesel rose 4.37 cents, or 1.5%, to $2.9344 a gallon.