US sees stronger 2012 world oil demand growth
Global oil demand growth will accelerate next year, while non-OPEC production will remain flat, driving oil prices to a record high average of $99 a barrel, the US government said on Tuesday in its first energy forecast for 2012.
January 12, 2011 / 13:07 IST
Global oil demand growth will accelerate next year, while non-OPEC production will remain flat, driving oil prices to a record high average of USD 99 a barrel, the US government said on Tuesday in its first energy forecast for 2012.
The Department of Energy also said US Gulf of Mexico oil production would shrink by 180,000 barrels per day (bpd) next year after a 220,000-bpd loss this year, illustrating the challenge of delivering new supply on the same day that a White House commission recommended dramatically stepping up offshore drilling regulations. The new monthly forecast from the department's Energy Information Administration made marginal changes in the oil demand outlook for 2011, paring global growth by just 20,000 bpd for a 1.7% annual rise.Oil demand is set to grow 1.9% in 2012, taking consumption to a new record of 89.65 million bpd after breaking this year's expected all-time demand high of 88.02 million bpd.But the agency cut non-OPEC production growth this year by nearly 40% to just a 170,000-bpd increase, and said output would climb by a meager 20,000 bpd in 2012, requiring an increase in supply from the Organization of the Petroleum Exporting Countries (OPEC) to prevent another price spike."Consequently, EIA expects the market will rely on both inventories and significant increases in production of crude oil and non-crude liquids in OPEC member countries to meet world demand growth," the agency said.The EIA, which had issued the most accurate forecast for 2010 prices in a Reuters poll conducted a year ago, also forecast oil prices to average USD 93 a barrel this year and rise to an average USD 99 in by the fourth quarter of 2012. Those are both higher than the current Reuters analyst poll that shows forecasts for USD 86.36 and USD 92.50, respectively ."Should OPEC not increase production as global consumption recovers, oil prices could be significantly higher," the EIA warned.Consumers will feel the pain of higher oil prices at the gasoline pump. The agency US gasoline prices could exceed USD 3.50 a gallon this summer and there's a small chance they could jump past USD 4 during August and September. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
