WASHINGTON (Reuters) - The Environmental Protection Agency will propose, later on Friday, a new federal target for U.S. biofuel use in 2014, attempting to prevent a projected fuel-blending crunch next year.

Market watchers will likely scan the proposal to see if it contains as deep a cut in the amount of ethanol that must be blended into U.S. gasoline next year as seen in an agency document leaked last month and seen by Reuters.

In what would be a historic retreat from an ambitious 2005 law that was updated in 2007 and a victory for refiners, the agency had proposed a "significant" reduction in the overall renewable fuel requirements to 15.21 billion gallons, far less than the 18.15-billion-gallon 2014 target established by law, the documents show.

Ethanol RINs - used by the EPA to record compliance with the renewable fuel standard - have inched higher ahead of the announcement, and were seen at 25 cents each on Friday morning.

They had dipped as low as 20.5 cents each on Wednesday, and edged upward ahead of the 2014 announcement.

(Reporting By Timothy Gardner and Cezary Podkul in New York; Writing by Valerie Volcovici; Editing by Bernadette Baum)