The US Energy Information Administration (EIA) Tuesday released its latest update to the agency's Short-Term Energy Outlook.

The update includes a number of changes:

1. Crude oil prices are forecast to decline in the last four months of the year, with Brent falling from an average of $117 a barrel at the end of August to $111 a barrel to an average of $103 a barrel for 2013 and WTI to average $93 a barrel in 2013.

2. Gasoline prices are now forecast to average $3.58 a gallon in the fourth quarter, down from $3.66 a gallon in the third quarter. Gasoline is expected to average $3.43 a gallon in 2013.

3. US crude oil production is forecast to average 6.3 million barrels a day in 2012, up 700,000 barrels a day from the 2011 average. Production is expected to rise to 6.8 million barrels a day in 2013.

4. Fuel-switching from coal to natural gas for electricity generation has peaked and the EIA expects the trend to reverse in 2013. The agency expects natural gas-fired generation to decline by 10% in 2013, while coal fired-generation is expected to rise by 9%.

Note: The OPEC report which came out earlier Tueday projected US crude production of 9.74-M BPD in Y 2012. The substantial difference is due to what gets counted. OPEC adds liquids and ethanol to its total while the EIA counts these and other liquids separately.

The good news: In the USA gasoline prices are forecast to fall beginning later this month and to remain below $3.50 gal in Y 2013. And while increased production plays some role in the decline, the drop is mostly due to the weak economic forecast for Y 2013.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.