US lifts world oil demand growth forecast
Washington, August 11, 2010
The US government has boosted its forecast for global oil demand growth this year and next, with developing countries driving consumption despite a slower outlook for the US economy.
In its latest monthly report, the US Energy Information Administration (EIA) raised its estimate of 2010 world oil consumption growth by 10,000 barrels per day from its previous forecast, with a growth of 1.57 million bpd to 85.91 million bpd.
The agency also revised up by 40,000 bpd world oil demand growth for 2011, now forecast to rise 1.51 million bpd from 2010 to 87.42 million bpd.
Developing countries, such as China, Saudi Arabia and Brazil, account for most of this expected growth in world oil consumption, the EIA said.
The agency raised its forecast for oil demand growth in China this year by 80,000 bpd to 650,000 bpd from the agency's prior estimate and by 10,000 bpd to 560,000 bpd in 2011.
A slowdown in Chinese crude oil imports had weighed on oil prices early on Tuesday, pushing prices below $80 per barrel.
But US oil futures pared loses and settled at $80.25, down 1.5 per cent after the Federal Reserve took fresh steps to support a fragile recovery.
Matt Smith, a commodity analyst with Summit Energy, said China's efforts to rein in its economy should not have a lasting effect on oil demand and consumption should rise next year as EIA forecasts.
'I still believe that should be something that is transitory, as long as there's enough domestic demand there to keep emerging markets pushing on,' Smith said.
The US is the only industrialized nation expected to post significant gains in oil consumption in 2010 and 2011, rising about 150,000 bpd both years.
'This reverses the trend of falling consumption over the last four years,' EIA said.
With demand on the rise, the oil market is beginning to tighten. For 2011, the gap between global oil demand and available supplies is expected to increase by 90,000 bpd, as EIA forecasts world consumption will be 320,000 bpd more than supply next year.
Some analysts said the sluggish US economy could force EIA to lower some of its global demand projections.
'If some of the signs we're seeing lately of lower demand and weakening economy start to really plant roots, then I think some of these are going to turn out be optimistic,' said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut.
The EIA report was the first of three major petroleum forecasts set to be released this week. The International Energy Agency will unveil its latest forecast on Wednesday, and the Organization of the Petroleum Exporting Countries will issue its forecast on Friday.
EIA's 2011 global oil demand estimate falls between IEA's previous forecast of 87.84 million bpd and Opec's prior estimate of 86.41 million bpd.
The EIA has typically been more bearish on demand recently than IEA and more bullish than Opec. – TradeArabia News Service