Global oil demand is set to grow to a bigger record this year while output growth will be smaller than prior forecasts, the U.S. Energy Information Administration (EIA) said on Tuesday.
The widening supply deficit will increase withdrawals of oil from global stockpiles, pushing Brent crude prices back above $80 a barrel in the physical spot market this month, the EIA said in its short-term energy outlook.
Spot Brent prices averaged $73 a barrel on Sept. 6, the agency said. On Tuesday, futures contracts tied to the global crude benchmark slumped below $70 for the first time since December 2021.
Global oil demand is expected to average around 103.1 million barrels per day this year, the EIA said, about 200,000 bpd higher than its previous forecast of 102.9 million bpd.
Global output is now expected to average 102.2 million bpd, down from the prior forecast of 102.4 million bpd, as the Organization of the Petroleum Exporting Countries (OPEC) has delayed its plan to increase output, the EIA said.
OPEC and its allies had planned to boost output beginning in October but with crude prices sliding in a weak global economy, they postponed that last week to boosting output from December onwards.
The group on Tuesday trimmed its demand growth forecasts for this year to about 2 million bpd, which is still double EIA’s current estimate of 1 million bpd growth.
EIA’s forecasts imply global demand outpacing output by about 0.9 million bpd this year, compared with a 0.5 million delta in its prior forecast.
“Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed,” the EIA said.
(Reporting by Shariq Khan and Scott DiSavino in New York; Editing by David Gregorio)