World oil demand growth will fall by 70,000 barrels per day to 1.47 million barrels per day this year, according to a new forecast published by the U.S. Energy Information Administration.
The agency also cut its projection for 2018 oil demand growth by 10,000 bpd to 1.61 million bpd. The report also noted that oil prices averaged $46 a barrel in June - $4 lower than the month prior, marking it as the lowest average since last November.
The EIA expects natural gas' share of U.S. total utility-scale electricity generation to fall from 34 percent last year, to 31 percent in both 2017 and 2018 due to higher prices that will render the fuel more expensive than coal.
Oil prices have entered bearish markets again as new output from Nigeria, Libya and the United States counteracts the impact of the Organization of Petroleum Exporting Countries' (OPEC) 1.2 million-barrel production cuts, which went into effect in January.
The Energy Information Administration (EIA) predicted last month that gasoline consumption in the U.S. during the summer months would peak at 9.5 million bpd-up 20,000 bpd from 2016, a record high year for fuel demand.
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Saudi Arabia will deliver full crude oil volumes to India and Southeast Asia next month, in a sign that OPEC's largest exporter and de facto leader is clinging to its market share in the fastest oil-demand growth region amid the production cut deal.
Riyadh cut exports to the U.S. last month in an attempt to force the North American country to begin eating into its large inventories, which prevent large crude orders from international markets. The initiative ultimately failed when Iraq, OPEC's No. 2 oil producer, began selling its heavy crude to American buyers as a substitute for Saudi Arabian grades.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More