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Wednesday, 07 January, 2009, 19:50 GMT | more >>

EIA slashes demand forecast



By Upstream staff 

The EIA's energy forecast offered a grim view of global oil market supply, cutting its prediction for supplies from both Opec and non-Opec countries for 2008 despite tight fundamentals this summer.

A slowing US economy is not enough to put the brakes on an increasing global oil demand, the EIA said in its monthly oil market report.

World oil consumption is expected to grow by 1.2 million barrels per day in 2008, the EIA said.

"The global oil market remains tight entering the second quarter, despite a slowdown in US oil consumption and growing risks to global economic growth," it said.

For the first time ever, the US Energy Information Administration boosted its full-year price forecast for West Texas Intermediate crude oil - the US benchmark - to above $100 a barrel.

This year, EIA raised its forecast to $100.61 per barrel from the $94.11 projected last month. For 2009, EIA raised its forecast to $92.50 from $85.92 a month ago.

Opec, which pumps 40% of the world's oil, is expected to pump 32.05 million bpd for the rest of this year, down 500,000 bpd from last month's forecast.

The EIA has consistently predicted that non-Opec suppliers like Brazil, Azerbaijan, and Sudan will fill the gap later this year.

But the EIA keeps reining back expectations for new non-Opec oil.

Its latest projection is for 600,000 bpd of new supply later this year, down 100,000 bpd from a month ago due to delays in some key projects.

The EIA recognised that world oil markets should not count on non-Opec supply.

"The pace and timing of non-Opec supply growth will continue to be subject to possible delays in key projects, thus, production increases could be less than the current forecast," the EIA said.

The EIA also said that rising US stock levels are not enough to calm global oil markets

Because of a lack of any sizable surplus capacity outside of Saudi Arabia and supply outage concerns in Nigeria, Venezuela and Iraq, "a higher level of commercial inventories is desirable," the EIA said.

Stocks held by OECD members could enter the summer nearly 50 million barrels above the five-year average, and hold above the five-year average for the rest of 2008, the EIA said.

Due to lower-than-expected oil use in the fourth quarter of 2007 by some European and Asian nations and sagging US gasoline demand, the EIA pegged total oil inventories held by industrialized nations at 2.58 billion barrels - up 53 million barrels from last month's forecast.

Inventories in the US, which account for about 40% of global OECD inventories, rose 1 million barrels in the first quarter of 2008 despite an average decline of 26 million barrels in past years.

Tuesday, 08 April, 2008, 16:11 GMT  | last updated: Tuesday, 08 April, 2008, 17:53 GMT

Rising demand:forecast calls for increased oil demand said EIA
 

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