EIA cuts world 2009 oil demand forecast

WASHINGTON (Reuters) - The U.S. Energy Information Administration on Tuesday lowered its 2009 world oil demand estimate from its previous report, in spite of rising optimism over the economy's recovery.

In its new monthly energy forecast, 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 precipitously 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.

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," the agency said.

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 production cuts by the Organization of the Petroleum Exporting Countries.

"The rising level of global oil inventories when combined with weak current consumption indicates overall weakness in the oil market," EIA said.

The agency also cut its forecast for U.S. oil demand in 2009, lowering its estimate to 18.71 million bpd. U.S. oil consumption is now set to fall 790,000 bpd in 2009, compared with a previously reported drop of 650,000 bpd.

U.S. 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," EIA 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.

(Additional reporting by Russ Blinch; Editing by Marguerita Choy)