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UPDATE 1-US sees high oil prices cutting into global use
April 12, 2011 / 7:22 PM / 7 years ago

UPDATE 1-US sees high oil prices cutting into global use

* Higher oil prices to cut into global oil demand in 2012

* U.S. summer gasoline consumption weak on high pump price

* More ethanol accounts for 10 pct of summer gas demand (Recasts story, adds details on world oil demand, U.S. summer gasoline market)

By Tom Doggett

WASHINGTON, April 12 (Reuters) - High petroleum prices will cut into global oil demand but not until next year, the U.S. government’s energy forecasting agency said on Tuesday.

Demand over the next two years will still be strong enough to result in “an expected drawdown of global petroleum stocks and a call for increasing production from OPEC member countries,” the Energy Information Administration (EIA) said in its monthly forecast.

This will reduce global surplus crude oil production capacity at a time when the disruption of crude oil exports from Libya is already causing significant supply risks, the EIA said.

The supply risks are reflected in rising crude oil prices, which for U.S. oil was revised up by $5 to $106 a barrel for this year and by $9 to $114 a barrel for 2012.

Nonetheless, global oil demand is expected to increase by 1.52 million barrels per day (bpd) this year and grow another 1.56 million bpd in 2012, which is 120,000 bpd less than EIA previously forecast.

“There was some impact on demand because of higher (oil) prices,” said EIA analyst Tancred Lidderdale, who added that world oil demand will remain strong, driven by rising fuel consumption in developing countries.

To help meet that demand, top OPEC producer Saudi Arabia has been pumping more oil than previously believed since the beginning of the year. The EIA raised its estimate of Saudi oil output by 100,000 bpd to 9.1 million bpd for both January and February and also put the kingdom’s production at 9.1 million bpd for March.

In the United States, higher oil prices will cause more pain for drivers at the pump.

U.S. gasoline prices are forecast to average $3.86 a gallon this summer compared with $2.76 last summer, and may peak above $4 on a monthly average in July, the EIA said.

As a result, the average U.S. household will spend $825 more for gasoline this year.

Higher pump prices will cut into some driving, as U.S. summer gasoline demand is expected to be just 0.5 percent higher than last summer.

“The continuing economic recovery tends to boost gasoline and diesel fuel consumption, while the effect of higher retail prices tends to dampen it,” the EIA said.

U.S. gasoline imports are forecast being 10 percent lower this summer on the weaker demand and as more ethanol production reduces the need for some fuel imports.

Blending of fuel ethanol into gasoline is expected to increase 5 percent this summer, accounting for nearly 10 percent of total U.S. gasoline consumption, the EIA said. (Additional reporting by Timothy Gardner and Ayesha Rascoe; editing by Jeffrey Benkoe)

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