Driving away: the EIA has revised its world demand forecast, despite good economic indicators
EIA trims world demand forecast
The US Energy Information Administration (EIA) has cut its world oil demand forecast for the year, despite rising optimism that the global economy is recovering.
In its new monthly energy forecast, released last night, the EIA said it expects global oil consumption to drop 1.71 million barrels per day to a revised 83.76 million bpd this year compared with 2008.
In July, the agency had estimated that petroleum demand would fall 1.56 million bpd in 2009.
Global oil demand has fallen steeply since 2008, as the world's largest economies have languished in recession. The EIA said it expects the world economy to begin to recover slightly at the end of the year, a Reuters report said.
World petroleum consumption is expected to rise 940,000 bpd to 84.70 million bpd in 2010.
Some analysts had expected the EIA would bolster its world oil demand forecast based on some positive economic reports that have pushed oil prices up to around $70 per barrel this week.
"The oil market continues to be defined by the tension between optimism over the perceived recovery of the global economy on the one hand and persistently weak global consumption of crude oil and other liquid fuels on the other," Reuters quoted the agency as saying.
While there are some signs that oil consumption could be recovering in developing countries, the agency said that has been offset by the "erosion of compliance" with Opec's production cuts.
"The rising level of global oil inventories when combined with weak current consumption indicates overall weakness in the oil market," the EIA said.
The agency also cut its forecast for US oil demand this year, lowering its estimate to 18.71 million bpd. US oil consumption is now set to fall 790,000 bpd in 2009, compared with a previously reported drop of 650,000 bpd.
US oil demand in 2010 is forecast to rise 280,000 bpd to 18.99 million bpd.
On the supply side, the agency said its forecast for second quarter Opec oil production was 28.7 million bpd, largely unchanged from the first quarter.
"The combination of higher prices and Opec's historical tendency for weaker compliance with production targets over time suggests that Opec crude oil production could rise over the remainder of the year, unless prices fall sharply from current levels," the report said.
The EIA lowered its estimate for non-Opec oil output this year to 50.06 million bpd from 50.14 million bpd in its last forecast.