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Global and U.S. oil demand growth next year will not meet prior forecasts due to weakening economic activity in China and North America, the U.S. Energy Information Administration (EIA) said on Tuesday in its Short-Term Energy Outlook report.
World oil demand is expected to grow 1.2 million barrels per day to 104.3 million bpd next year, about 300,000 bpd below prior forecasts, the EIA said. Demand would come in at around 103.1 million bpd this year, a 20,000 bpd reduction on prior forecasts, the EIA said.
The administration’s reductions to this year’s outlook reflect declining imports and refinery runs in China, the top buyer of crude in international markets, the EIA said. Cuts to next year’s forecasts are due to concerns of weakening industrial production and manufacturing growth in the U.S. and Canada, the agency said.
The EIA expects U.S. oil demand to rise to 20.5 million barrels per day (bpd) next year, down from its previous forecast of 20.6 million bpd. U.S. demand forecast for 2024 was unchanged at 20.3 million bpd, according to the EIA report.
The world’s leading oil market forecasters have been far apart this year on demand growth estimates, owing to differences on China and on estimates of the pace of the transition to alternative energy sources. The Paris-based International Energy Agency expects oil demand to grow by 950,000 bpd next year, whereas the latest estimate from the Organization of the Petroleum Exporting Countries is for a 1.74 million bpd jump.
The three are also still a long way apart on demand growth forecasts for 2024, with just a few months left in the year. The EIA sees global oil demand growth at 940,000 bpd in 2024, the IEA pegs it at 900,000 bpd- while OPEC forecasts just over 2 million bpd of growth.
U.S. oil production is also expected to grow to smaller records both this year and next year, the EIA said. Currently the top oil producer in the world, the U.S. is expected to pump 13.22 million bpd this year, down from a prior forecast of 13.25 million bpd, the EIA said.
U.S. oil output in 2025 is now expected to average 13.54 million, down about 1% from the prior forecast of 13.67 million bpd, the EIA said.
EIA also lowered its forecasts for oil prices: it now expects U.S. crude oil to average around $76.91 per barrel in 2024, a 2.4% cut on its prior forecast, whereas Brent prices are expected to average $80.89 per barrel this year, 2.3% lower than the previous forecast.
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