US cuts world oil demand growth on economy

Friday, 9 September 2011 01:45 - - {{hitsCtrl.values.hits}}

WASHINGTON, Reuters: Global oil demand will grow less than previously projected next year as the economy staggers, the U.S. government forecast on Wednesday. World consumption will rise by 1.39 million bpd or around 1.6 percent next year, the Energy Information Administration said, some 250,000 bpd less than it forecast a month ago.

his year's growth forecast was unchanged at 1.37 million bpd. The lower projection, which brings the EIA into line with the consensus of other analysts, is the result of throttling back U.S. economic growth estimates following a wave of data suggesting the recovery has stalled. The cost of crude for refiners was expected to reach $103 per barrel in 2012 instead of last month's forecast of $107 per barrel, the EIA said, with added pressure from higher than expected production growth from countries outside the OPEC cartel, including Brazil, Canada and China. The EIA warned that prices are at risk of rising quickly due to unrest in oil-producing regions and as demand from developing countries could be stronger than expected.

"Yet downside risks arguably predominate," as fears persist about the rate of global economic recovery, contagion effects of the debt crisis in the European Union, and other fiscal issues facing governments, it said.

The EIA's forecasts are based on U.S. real gross domestic product growth of 1.5 percent this year and 1.9 percent next year, compared with growth of 2.4 percent and 2.6 percent in last month's forecast. It forecast oil-consumption weighted world GDP to grow 3.1 percent and 3.8 percent in 2011 and 2012, compared with 3.4 percent and 4.1 percent in the previous outlook. Oil production from nations outside the Organization of the Petroleum Exporting Countries should rise 770,000 barrels per day in 2012 to average 53.1 million barrels a day, the Energy Information Administration forecast in a monthly report. In August, the EIA had forecast production at a slightly lower 53.08 million barrels per day. Production was also expected to rise from Columbia, Kazakhstan and the United States, the EIA said.

Oil output from OPEC was expected to be mixed as only about half of Libya's exports will recover by the end of next year, the EIA said. In 2011, OPEC exports should fall about 360,000 bpd, the EIA said. The restoration of at least some Libyan exports next year will help boost 2012 OPEC production by 510,000 bpd to 36.23 million bpd, it said. Production is not expected to grow from all non-OPEC countries. Russian oil output is expected to fall about 120,000 bpd to 10.08 million bpd next year.