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February 6, 2007 4:00 PM, EST

DOE Lowers 2007 Diesel Price Forecast to $2.59 a Gallon

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Diesel prices will average $2.59 this year, down from $2.705 last year and 7 cents below an earlier forecast, the Department of Energy said Tuesday.The forecast was based on projections for the rest of the year following January’s $2.485 average, DOE said in its monthly short-term energy outlook released Tuesday.In its December outlook, DOE had projected diesel to average $2.66 a gallon for 2007. (Click here for previous coverage.)Diesel’s price fell 20.8 cents over eight consecutive weeks of decreases from mid-December through last week, before rising 2.2 cents Monday to $2.435 a gallon, according to DOE figures.DOE also lowered its price outlook for crude oil from a previous forecast, to $59.50 a barrel this year and $62.50 in 2008, down from last year’s $66 per-barrel average.Oil hit a record closing price of $77.03 last July on the New York Mercantile Exchange and hit a 12-month low closing price of $50.48 on Jan. 18. The price has risen since then and oil closed at $58.88 on the Nymex on Tuesday, Bloomberg reported.A preliminary estimate of U.S. petroleum products consumption last year showed it was down about 0.9% from 2005, DOE said.For 2007 and 2008, total petroleum product consumption will increase by 1.4% and 1.5%, respectively, with most petroleum categories contributing to that growth, DOE said.Motor gasoline consumption is projected to increase by an annual average of 1.3% through 2008, buoyed by economic growth and lower prices.Distillate demand — which includes diesel and home heating oil — is expected to show continued growth under assumptions of normal weather, DOE said.