NEW YORK (Reuters) - U.S. oil demand is set to crash by 2.2 million barrels per day (bpd) in 2020 to 18.3 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, as the coronavirus pandemic restricts movement across the world and erodes fuel demand.
Meanwhile, U.S. crude production is expected to fall 540,000 barrels per day (bpd) from last year’s record high to 11.7 million bpd in 2020, the agency said, compared with its previous forecast for a decline of 470,000 bpd.
The EIA said it expects U.S. motor gasoline consumption to fall to an average of 7 million bpd in the second quarter from 8.6 million bpd in the first quarter, and gradually increase to 8.7 million bpd in the second half of the year.
The statistical arm of the U.S. Department of Energy now expects 2020 world oil demand to drop 8.1 million bpd to 92.6 million bpd, compared with a previous forecast for a drop of 5.2 million bpd.
Global supply is expected to drop by 5.4 million bpd to 95.2 million bpd this year, compared with the agency’s previous estimate for a decline of 1.2 million bpd.
Record supply curbs by the Organization of the Petroleum Exporting Countries and its allies has stemmed a collapse in oil prices, although fears about a second wave of the virus have gripped markets this week and weighed on the markets. [O/R]
Germany reported on Monday that new coronavirus infections were accelerating exponentially after early steps to ease its lockdown while Wuhan, the epicentre of the outbreak in China, reported its first cluster of infections since the city’s lockdown was lifted a month ago.
For 2021, global and U.S. oil demand is expected to rise by nearly 7 million bpd and 1.5 million bpd respectively, the EIA said in its monthly forecast.
“The possibility of lasting behavioral changes to transportation and oil consumption patterns present considerable uncertainty to the increase in liquid fuels consumption, even with a significant increase in GDP,” EIA Administrator, Linda Capuano said in a statement.
U.S. crude output for 2021 is expected to slide further, declining by about 790,000 bpd to 10.9 million bpd compared with a previous forecast for a drop of 730,000 bpd.
The historic drop in prices last month has North American oil companies on course to cut roughly 1.7 million bpd, or 13%, by midyear, according to a Reuters analysis of U.S. state and company data.
The EIA said it expects the United States to return to importing more crude and petroleum products than it exports in the third quarter and remain a net importer in most months through the end of 2021.
Firmer demand growth as the global economy begins to recover and slower supply growth will also contribute to global oil inventory draws beginning in the third quarter of 2020, EIA said.
Reporting by Devika Krishna Kumar in New York; Editing by Chizu Nomiyama and Marguerita Choy