PREVIEW-Weak economy may prompt lower EIA oil use forecast
WASHINGTON, Sept 7
WASHINGTON, Sept 7 (Reuters) - The U.S. government's energy forecasting agency could pare its monthly outlook for world oil demand after two months of gains due to the struggling U.S. economy.
The U.S. Energy Information Administration will release its latest forecasts for U.S. and global oil demand on Wednesday, the first of three demand projections due this week.
The U.S. agency was in the middle of the pack last month, with the International Energy Agency the most optimistic on energy demand and OPEC the most bearish.
In August, the EIA raised its forecast for global oil demand growth by a modest 10,000 barrels per day for this year to 85.9 million bpd and by 40,000 bpd to 87.4 million bpd for 2011.
Recent government reports, however, show a weak U.S. economy, businesses reluctant to expand, and high unemployment.
U.S. private-sector employment increased by only 67,000 jobs in August and sales of previously owned homes hit a 15-year low.
"On balance, most of the economic data is not very good. They really should lower their demand expectations," said Phil Flynn, energy analyst at PFGBest Research in Chicago.
"I don't know if they are going to go out on a limb and change their demand figures. But if they do, I think there's a greater risk for a downward adjustment than an upward adjustment," Flynn added.
Tim Evans, energy analyst for Citi Futures Perspective, said the faltering economy would weigh on oil consumption.
"If I were revising their forecast from last month, I would be trimming demand," he said.
"I'm bearish on the market itself. Our inventory levels are very high. We don't have physical demand to hold prices where they are," Evans said.
Matt Smith, an analyst at Summit Energy in Louisville, Kentucky, said the government's forecast of warmer-than-normal temperatures along the East Coast through November could cut into heating oil demand in the EIA's forecast.
Smith also noted the Chinese were trying to cool their economy, which would create temporary weakness in global oil demand. While China is the world's biggest energy user, about two-thirds of its demand is satisfied by coal.
OPEC releases its September forecast on Thursday, followed by the International Energy Agency's outlook on Friday.
In August, the IEA forecast global demand would climb by 1.8 million bpd to 86.6 million bpd in 2010, raising its demand growth estimate by 80,000 bpd.
The IEA said oil consumption would rise by 1.3 million to 87.9 million bpd in 2011, which was 50,000 bpd higher than previously forecast.
OPEC last month forecast global oil demand to rise by 1.05 million bpd to 85.5 million bpd in 2010, increasing its demand growth forecast by 100,000 bpd. OPEC left its 2011 outlook unchanged at 86.56 million bpd.
The most recent monthly world oil demand forecasts from EIA, IEA and OPEC are as follows:
WORLD DEMAND CHANGE IN WORLD DEMAND CHANGE IN
2010 (mln bpd) DEMAND GROWTH 2011 (mln bpd) DEMAND GROWTH IEA 86.6 +80,000 87.9 +50,000 EIA 85.9 +10,000 87.4 +40,000 OPEC 85.5 +100,000 86.6 unchanged (Reporting by Tom Doggett and Ayesha Rascoe; Editing by Dale Hudson)
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