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EIA Cuts Global Oil Demand Forecast, But Modestly

Oil Rig

The Energy Information Administration forecasts global oil demand to grow by 1.44 million barrels per day this year on average, which is down by 10,000 bpd from its previous projection according to its monthly report issued on Tuesday.

At the same time, however, the EIA revised up its 2017 global oil demand growth forecast to 1.49 million bpd, an increase of 20,000 bpd.

The agency’s administrator, Adam Sieminski, said that this growth – both this year and next – will be driven mainly by China and India, while European demand could weaken after Britain’s exit from the European Union.

U.S. demand, on the other hand, is set for a 160,000-barrel-a-day growth this year, according to EIA estimates. That’s down from a rate of 220,000 bpd projected earlier. Next year, demand in the world’s top consumer of crude should grow by 120,000 bpd, up from an earlier estimate of 60,000 bpd.

In 2017, the U.S. will consume an average of 19.68 million bpd, the EIA also said, with Sieminski explaining that low oil prices, robust gasoline production, and piling up fuel stockpiles will spur greater demand among motorists.

Related: The Bears Are Back – Oil Slides On Negative Sentiment

While demand rises, U.S. crude output is expected to continue its decline. In the current year, the EIA expects crude output to drop to 8.61 million bpd, which is a slight increase on the previous forecast of an average 8.6 million bpd. Next year, this will fall further to 8.2 million bpd, up from a previous forecast of 8.19 million bpd.

Also today, the International Energy Agency warned that demand for crude is slowing down while stockpiles are staying at record highs. Even though the agency acknowledged that the superglut from the start of the year has begun to subside, there were warning signs of potential instability, namely abundant stockpiles that could threaten the market’s rebalancing.

By Irina Slav for Oilprice.com

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