EIA lowers oil demand forecast in latest short-term outlook
In its latest Short-Term Energy Outlook, the EIA has lowered its projections for oil demand in 2009-10 as the global economic contraction continues to depress energy demand.
By OGJ editors
HOUSTON, Mar 10 -- In its latest Short-Term Energy Outlook (STEO), the Energy Information Administration has lowered its projections for oil demand in 2009-10 as the global economic contraction continues to depress energy demand.
EIA now expects US real gross domestic product (GDP) to decline 2.8% in 2009, leading to a reduction in energy consumption for all major fuels. EIA forecasts that an economic rebound will begin in 2010, with 1.9% year-over-year growth in US real GDP.
Average annual world oil consumption is projected to decline almost 1.4 million b/d in 2009, with consumption in Organization for Economic Cooperation and Development countries falling 1.6 million b/d. This expected decline is 200,000 b/d larger than in last month's STEO, reflecting lower expectations of global economic activity this year.
EIA assumes that worldwide GDP growth will decline 0.8% this year, followed by growth of 2.6% in 2010, compared with last month's assumption of a 0.1% decline this year and 3% growth next year.
EIA forecasts that the global economic slowdown will cut the price of West Texas Intermediate crude by more than half from last year's $100/bbl average. EIA expects WTI to average $42/bbl in 2009, and $53/bbl in 2010. These price forecasts are slightly lower than in the previous STEO.
EIA also reported in the latest STEO that retail gasoline prices, which have been slowly increasing over the last 2 months, are projected to average $1.96/gal in 2009 and $2.18/gal next year.
The Henry Hub natural gas spot price is forecast to decline to about $4.70/Mcf in 2009, from an average of $9.13/Mcf in 2008 but then increase in 2010 to an average of almost $5.90/Mcf.
The US economic downturn is the principal cause for the decline in domestic natural gas consumption, EIA said, particularly in the industrial sector, where gas demand is projected to fall 6% in 2009.
EIA sees US natural gas consumption declining 1.3% this year, and then rebounding a bit in 2010. However, EIA forecasts that gas consumption by the electric power sector will grow 0.4% in 2009.