Wednesday April 7, 10:00 pm Eastern Time
World oil demand seen 1.2 mln bpd above supply-DOE
WASHINGTON, April 7 (Reuters) - World crude oil demand is expected to continue to increase this year while global oil production retreats, reducing much of the excess oil in storage, according to the U.S. Department of Energy.
In its updated short-term energy forecast to be released on Thursday, the DOE said world demand for crude oil this year should exceed supply by 1.2 million barrel per day (bpd).
Due to recent output cuts announced by major oil producing nations, the DOE is forecasting 1999 global oil demand at 75.1 million bpd and crude supply at 73.9 million bpd.
Last month, the department forecast just a 300,000 bpd gap, with world oil demand at 75.0 million bpd and supply at 74.7 million bpd.
World crude oil prices are now expected to average $15 to $16 a barrel at the end of the year, with West Texas Intermediate crude averaging about $18 a barrel, the DOE said.
''This assumes that the recently announced oil production cuts by OPEC (and others) actually do have significant impact and that oil demand growth outside of the major industrialized countries begins to show some strength after this year,'' the DOE said.
OPEC oil producers agreed last month to remove just over 1.7 million barrels per day from the world crude market.
Non-OPEC countries Mexico, Norway, Oman and Russia also promised to cooperate and reduce their own production by another 388,000 bpd, bringing total cuts to 2.1 million bpd.
However, the DOE questioned whether the oil reduction targets will be fully reached.
''Just as the previous two agreements to cut production were only partially implemented, so these most recent cuts are also likely to be. However, enough oil should be removed from the market to support the expected (oil) price rise,'' the DOE said.
With continued strength in the U.S. economy, petroleum demand in the United States is expected to increase 490,000 bpd in 1999 to 19.26 million bpd, up 2.6 percent from 1998 and 30,000 bpd more than forecast last month, the DOE said.
The department attributes much of this growth to higher demand for heating fuel and transportation fuels.
Indeed, the DOE is forecasting gasoline demand this summer driving season will be up 2 percent from last season, even though retail gasoline prices will be 9 to 10 cents higher from a year earlier, averaging $1.13 a gallon. |
