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25 June 2024

EIA sees more oil demand over two years

EIA expects US oil demand to grow at a slower rate because of the economic recovery. (GETTY IMAGES)

By Reuters

US and global oil demand will increase in 2010 and 2011, but the growth rate in petroleum consumption will not be as strong as in years past, according to advance details provided to Reuters on a US government monthly energy supply and demand forecast.

The Energy Information Administration's forecast, which was due to release yesterday, expects the US economy to grow about two per cent this year and close to 2.7 per cent next year, resulting in rising oil demand.

"We're not working off a double-dip recession in our forecast," said an EIA analyst familiar with the agency's outlook who did not want to be identified.

However, the EIA expects US oil demand will grow at a slower rate than in the past because the economic recovery will not be as vibrant.

"In the US a decade ago, we might have expected 400,000 barrels per day (bpd) growth to be closer to normal, where as now we're probably closer to half that," the analyst said.

As a result, the EIA's new monthly energy forecast will cut the 270,000 barrel per day (bpd) increase in oil demand for this year that the agency had predicted last month.

The agency's first supply and demand forecast for 2011, which was included in yesterday's report, will show an increase in US oil consumption next year of under 300,000 bpd, but still more than 2010's demand growth, the analyst said.

The EIA forecast is not final and it could change before the agency issues its report.

Separately, the EIA will slightly lower its estimate for global oil demand growth for this year from its prior forecast of a 1.1 million bpd increase, the analyst said. World oil demand growth for 2010 will still be more than one million bpd.

As for 2011, global petroleum demand will also be higher than this year thanks to strong demand in developing countries, but the analyst declined to say whether next year's demand growth would be under 1.5 million bpd.

"Total world oil consumption will be stronger in 2011," the analyst said.

The International Energy Agency said in its most recent monthly energy forecast that world oil demand would increase by 500,000 bpd to 1.2 million bpd next year, depending on how strong the global economy grew.

The IEA releases its next monthly energy forecast on January 15, followed by the perspective of major oil producers on January 19, which is when the Organisation of the Petroleum Exporting Countries issues it monthly supply and demand outlook.


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