The energy number-crunching arm of the U.S. government is predicting the price of Brent crude will hover at just under $100 a barrel until the end of next year.

That’s significantly lower than the Newfoundland and Labrador government forecast in its budget estimates for 2012-13.

The provincial government expected oil to average $124 a barrel. It began the fiscal year in April near that level, but bottomed out near $90 last month before rebounding to $106 as of Friday afternoon.

Earlier in July, the Energy Information Administration (EIA) released its short-term energy outlook report.

The EIA is a wing of the U.S. government that acts as a clearinghouse for energy data.

nl-offshore-oil-rig-cbc1

Hibernia is one of three producing oil projects in the Newfoundland offshore.

According to its website, the EIA "collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment."

The EIA is predicting Brent crude to range between $97.50 and $99.50 a barrel over the next six quarters, up until the end of 2013.

Brent crude is a close, but not exact, reference point for Newfoundland oil.

"EIA’s downward price revisions reflect shifts in expectations about oil market balances and the additional downside risks that are currently dominating market sentiments," the July report notes.

The agency says its weaker growth outlook is prompted by increased economic concerns about the debt crisis in Europe and indications of slowing growth in China.

North of the border, the Bank of Canada has also softened its outlook on the price of commodities like oil.

Inexact science

Oil-price forecasting is, at best, an inexact science.

Provincial budgeting has been off by an average of $800 million a year over the past seven years, largely due to inaccurate oil projections.

Those wild swings have worked out in Newfoundland and Labrador’s favour in the past.

But this year could be a different story.

The province expects the 2012-13 deficit to come in at $258.4 million. That’s using the $124 a barrel figure.

Prices below that watermark would bite into royalties, which account for roughly one-third of provincial revenues.

Other factors also come into play, including production levels, the strength of the loonie, and various royalty arrangements for different projects.