U.S. EIA lowers 2009 world oil demand forecast
WASHINGTON (Reuters) - The U.S. Energy Information Administration on Tuesday again pared back its 2009 world oil demand forecast due to the global economic downturn, but predicted a slight recovery in consumption for next year.
World oil demand will drop by 810,000 barrels per day in 2009 compared with last year, down 200,000 bpd from its estimate in December, the EIA said in its monthly outlook.
"World oil consumption continues to be revised downward in response to the global economic downturn," the EIA said in its monthly short-term energy outlook.
The statistical wing of the Department of Energy first predicted last month that world oil consumption would contract for the first time since 1983 as the world economy slows to a near standstill.
"The EIA is acknowledging a further contraction in U.S. oil demand and while that seems to be no surprise with the economy now in recession, it points to 2009 as a challenging year," said Phil Flynn, an analyst with Alaron Trading in Chicago.
The EIA said it expected demand in the United States, the world's top consumer, to fall by 390,000 bpd in 2009, compared with 2008.
However, in its first predictions for 2010, the EIA said global demand could rise by 880,000 bpd to 85.98 million bpd, along with a modest rebound in the economy.
U.S. oil demand should rise by 160,000 bpd to 19.28 million bpd in 2010, the EIA said.
CHINA, OPEC
Despite the economic downturn, the EIA said demand in emerging economies would rise, with demand from No. 2 consumer China seen up by 280,000 bpd this year. Surging demand from emerging economies sent oil prices on a six-year rally.
Shrinking energy demand spurred by the financial crisis has taken its toll on world oil prices overall, however, with prices down from July's record over $147 a barrel to $38 a barrel on Tuesday.
The drop in prices has hit the coffers of oil producing countries as well as energy companies, prompting OPEC to agree to its steepest output reduction in history in December.
Prices have yet to rebound, however, and some members have said the group could cut production again in March.
"The market is not presently convinced that OPEC members will willingly curtail output enough to lead to much higher prices," the EIA said.
The EIA forecast OPEC production will fall by more than 2 million bpd in first quarter of 2009 and average 30 million bpd for the year, before rising to 30.7 million bpd in 2010.
The EIA's report is the first of three key petroleum demand forecasts to be released this week. Oil traders are also awaiting revised demand forecasts from the Organization of Petroleum Exporting Countries on Thursday and by the International Energy Agency on Friday.
"I would strongly expect the IEA to revise downward the growth outlook for this year," said Mike Wittner of Societe Generale. "I don't know if they're going to go all the way negative (from current projection of positive demand growth this year). They ought to. I think it's correct there will be a global contraction this year."
(Editing by Walter Bagley)
