EIA Cuts 2016 US Oil Demand Growth Forecast

Reuters

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)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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Stanley Orman | Jul. 12, 2016
Does anyone provide a Y-O-Y tally on the accuracy of these EIA palaverings vis-a-vis the real consumption? It seems to add more volatility than wisdom.

Bill Flaherty | Jul. 12, 2016
The variation behind the EIA demand numbers versus the API demand numbers is staggering. OPEC demand numbers also disagree with EIA demand numbers. I have to wonder if there isn't a government mandate driving press releases from the EIA. With 17.5 million cars sold in the U.S. in 2015 and 11.8 million cars sold year to date, (June 2016) it is questionable as to why the EIA would reduce demand growth figures. The new car sales does not remove old cars from the market with limited exception. Beyond cars, demand for plastics, petrochemicals and heating oil is expected to grow significantly. This forecast is questionable.


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