By DAN STRUMPF
The US Energy Information Administration (EIA) raised its 2012 oil price forecast by more than $2/bbl to $100.25/bbl, saying it assumes the US economy grows 1.8% this year.
The EIA issued the forecast in its monthly Short-Term Energy Outlook, released Tuesday.
In last month's report, the EIA expected 2012 West Texas Intermediate (WTI) crude to average $98/bbl.
The agency, a unit of the Department of Energy, also said it expects WTI to continue rising, costing an average of $103.75/bbl in 2013.
Those forecasts represent an increase from oil prices last year, when WTI averaged $94.86/bbl according to the EIA.
Despite fluctuating for much of last year, WTI prices have risen steadily over the last month, lifted by concerns about Iran's nuclear program and the possibility of supply disruptions.
On Tuesday, front-month February crude rose $1.14, or 1.1%, to $102.45/bbl on the New York Mercantile Exchange.
The agency said its forecast assumes US real gross domestic product grows by 1.8% in 2012 and 2.5% next year. Global GDP should grow 2.9% in 2012 and 3.8% in 2013.
Despite the forecast for higher crude prices, the EIA said it expects US regular gasoline to average $3.48/gal in 2012. The forecast is still 3 cents higher than the outlook for 2012 regular gasoline last month.
The agency expects regular gasoline in 2013 to rise to an average $3.55/gal.
Diesel fuel is expected to run an average of $3.85/gal this year, identical to last month's forecast and up a penny from the 2011 average.
In 2013, diesel prices should rise to an average of $3.93/gal.
Dow Jones Newswires