Energy prices are expected to remain high

Prices for natural gas and crude oil should remain high throughout 2006 before moderating next year, the Energy Information Administration says in its latest short-term forecast. EIA projects that overall U.S. energy demand will increase by 1.4% in both years. Natural gas prices are expected to average $9.80 per 1,000 cu ft in 2006 and $8.84 in 2007. Because prices remain high and summer weather in 2006 is expected to be cooler than last year's, EIA expects that demand for natural gas will be flat this year before increasing by 1.3% in 2007. Industrial demand is estimated to grow by 3.5% in 2006 and 1.3% in 2007. Crude oil prices are expected to average $63 per barrel this year and fall to $60 next year. Growth of world demand for oil is forecast to increase from 1.2 million bbl per day in 2005 to 1.6 million bbl per day in 2006 and to 1.9 million bbl per day in 2007. U.S. demand will rebound from a decline last year, and growth will pick up in Asian countries other than China, where growth is already strong, EIA says. An increase in the world's capacity to produce oil is expected over the two-year period, which should ease the tightness in oil markets.