NEW YORK, July 12 (Reuters) - The U.S. Energy Information Administration cut its forecast for U.S. oil demand growth in 2016, and increased its demand growth forecast for 2017, according to a monthly outlook issued on Tuesday.
U.S. oil demand is expected to grow 160,000 barrels per day in 2016, compared with previous expectations for 220,000 bpd, according to the department. Demand will grow 120,000 bpd in 2017, compared with 60,000 bpd previously.
U.S. petroleum and liquid fuel consumption will still reach an average of 19.68 million bpd in 2017, in line with previous estimates, said the U.S. Energy Department's statistical wing.
"EIA expects U.S. drivers will see gasoline prices gradually decline from their June level through the end of this year," EIA Administrator Adam Sieminski said. "A combination of lower crude oil prices, high gasoline production, and rising gasoline inventories pushed gasoline prices down this year."
The price decline will encourage driving, accounting for some demand growth this year, even if it is more moderate than the growth previously expected.
Globally, the agency cut its 2016 world demand forecast by 10,000 bpd to a 1.44 million bpd year-on-year increase, and raised its 2017 world demand growth forecast by 20,000 bpd to a 1.49 million bpd rise.
"India and China are expected to account for much of the growth in global oil consumption this year and in 2017," Sieminski said.
In contrast, Britain's decision to leave the E.U. could cut European oil consumption if business investment and consumer spending falls, he said.
U.S. oil production is expected to decline less quickly than previously forecast, the agency said.
Crude production is expected to fall to 8.61 million bpd in 2016, compared with 8.60 million bpd forecast previously. In 2017, crude production will further decline to 8.20 million bpd, versus 8.19 million bpd forecast previously.
(Reporting By Jessica Resnick-Ault; Editing by Marguerita Choy)
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