U.S. EIA to hold world oil demand forecast steady

WASHINGTON (Reuters) - The U.S. government likely will not make significant revisions to its 2010 global oil demand forecast in a monthly report due on Tuesday, as consumption is expected to remain weak despite signs of U.S. economic recovery.

The U.S. Energy Information Administration last month boosted its estimate for world petroleum demand growth by 270,000 barrels per day to 1.5 million bpd. EIA said it expected world oil demand to rise to 85.51 million bpd in 2010.

Analysts said the agency will probably maintain this forecast when it releases its monthly short-term energy report on Tuesday at noon EDT (1600 GMT).

Last month, EIA's global oil demand estimate for 2010 fell between the International Energy Agency's forecast of 86.57 bpd and OPEC's forecast of 85.24 bpd.

Crude oil prices settled at nearly $87 a barrel on Monday on the New York Mercantile Exchange, bolstered by a report late last week that U.S. employers created 162,000 jobs in March.

But with the U.S. unemployment rate still at 9.7 percent, Guy Caruso of the Center for Strategic and International Studies said market fundamentals remain weak.

"The price run up in recent days is based on expectations we're going to get stronger growth, but whether that happens or not, nobody really knows," said Caruso, formerly the head of the EIA.

The EIA report will also include the agency's first outlook for summer fuel prices and demand this year. If oil prices stay around $85 a barrel, U.S. gasoline will probably climb to $3 a gallon, dampening fuel consumption, Caruso said.

Tim Evans, energy analyst for Citi Futures Perspective, said gasoline demand is unlikely to grow to any level near the peaks reached three years ago.

"You don't have a credible scenario for record gasoline demand this summer," Evans said. "Even if we can eke out higher demand than a year ago, it's still going to be well down from the 2007 peak demand and you're still going to have a situation where there's surplus refining capacity overhanging the market."

Despite high U.S. unemployment, gasoline demand may show some strength this summer, said Lawrence Eagles, an oil analyst at JP Morgan in New York.

"I don't think it's going to be the employment number per se that's going to make that shift, but it's going to be business activity picking up," Eagles said. He pointed out that air freight and passenger travel are rising.

"All of those things are picking up. You've got to be slightly more optimistic toward the gasoline side," Eagles added.

U.S. gasoline prices rose to $2.83 a gallon over the last week, the highest level since October 2008, the EIA said on Monday.

Traders will also be looking at distillate demand, which is closely linked to industrial development.

"If we see some good signs from the EIA on distillate demand, ... it should be net bullish for the market," said Brad Samples, analyst for Summit Energy.

The EIA forecast will be followed next week by releases of the monthly energy report from the International Energy Agency on April 13 and OPEC on April 14.

(Editing by Marguerita Choy)