US sees stronger world oil demand growth
Washington, January 12, 2011
Global oil demand growth will accelerate next year, while non-Opec production will remain flat, driving oil prices to an average $99 a barrel, the US government said in its first energy forecast for 2012.
The Department of Energy also said US Gulf of Mexico oil production would shrink by 180,000 barrels per day (bpd) next year after a 220,000-bpd loss this year, illustrating the challenge of delivering new supply on the same day that a White House commission recommended dramatically stepping up offshore drilling regulations.
The new monthly forecast from the department's Energy Information Administration made marginal changes in the oil demand outlook for 2011, paring global growth by just 20,000 bpd to 1.45 million bpd for a 1.7 percent annual rise.
Oil demand is set to grow 1.9 percent, or 1.63 million bpd, in 2012, taking consumption to a new record of 89.65 million bpd after breaking this year's expected all-time demand high of 88.02 million bpd.
Global oil demand growth in each of the next two years will be above the most recent 10-year average of about 1 million bpd, or a 1.2 percent annual increase. "We're stronger than average growth," said EIA senior analyst Doug MacIntyre.
Developing countries are expected to account for all of the world's oil demand growth over the next two years, with China, the Middle East and Brazil representing the biggest oil consumers.
But the agency cut non-Opec oil production growth this year by nearly 40 percent to just a 170,000-bpd increase, and said output would climb by a meager 20,000 bpd in 2012, requiring an increase in supply from the Organization of the Petroleum Exporting Countries (Opec) to prevent another price spike.
"Consequently, EIA expects the market will rely on both inventories and significant increases in production of crude oil and non-crude liquids in Opec member countries to meet world demand growth," the agency said.
The EIA, which had issued the most accurate forecast for 2010 prices in a Reuters poll conducted a year ago, also forecast oil prices to average $93 a barrel this year and rise to an average $99 in by the fourth quarter of 2012. Those are both higher than the current Reuters analyst poll that shows forecasts for $86.36 and $92.50, respectively.
"Should Opec not increase production as global consumption recovers, oil prices could be significantly higher," the EIA warned.
Consumers will feel the pain of higher oil prices at the gasoline pump. The agency US gasoline prices could exceed $3.50 a gallon this summer and there's a small chance they could jump past $4 during August and September. - Reuters