U.S. EIA lifts oil demand forecast, says prices will recover to above $80/bbl
Global oil demand is set to grow to a bigger record this year while output growth will be smaller than prior forecasts, the U.S. Energy Information Administration (EIA) said on Tuesday.
The widening supply deficit will increase withdrawals of oil from global stockpiles, pushing Brent crude prices back above $80/bbl in the physical spot market this month, the EIA said in its Short-Term Energy Outlook.
Spot Brent prices averaged $73/bbl on Sept. 6, the agency said. On Tuesday, futures contracts tied to the global crude benchmark slumped below $70/bbl for the first time since December 2021.
Global oil demand is expected to average around 103.1 MMbpd this year, the EIA said, about 200,000 bpd higher than its previous forecast of 102.9 MMbpd.
Global output is now expected to average 102.2 MMbpd, down from the prior forecast of 102.4 MMbpd, as the Organization of the Petroleum Exporting Countries (OPEC) has delayed its plan to increase output, the EIA said.
OPEC and its allies had planned to boost output beginning in October but with crude prices sliding in a weak global economy, they postponed that last week to boosting output from December onwards.
The group on Tuesday trimmed its demand growth forecasts for this year to about 2 MMbpd, which is still double the EIA's current estimate of 1 MMbpd growth.
The EIA's forecasts imply global demand outpacing output by about 900,000 bpd this year, compared with a 0.5 MM delta in its prior forecast.
"Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed," the EIA said.
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