EIA: Expectations Dim for a Near-Term Growth in Oil Demand

(EERE News, May 13, 2009) The global oil market for 2009 looks weaker today than it did a month ago, according to DOE’s Energy Information Administration (EIA). The EIA’s “Short-Term Energy Outlook,” released yesterday, now projects a fall in global oil consumption of 1.8 million barrels per day in 2009, a decline that is 0.4 million barrels per day larger than the EIA projected in April. The EIA notes that the initial data for the first quarter of 2009 shows high oil inventories, weak oil consumption, and higher-than-expected oil production, all of which are maintaining downward pressure on oil prices. Crude oil prices are now projected to average $52 per barrel in 2009 and only $58 per barrel in 2010, with the latter projection falling $5 below the EIA’s projection released in April.

That’s good news at the pump for consumers, who are projected to pay an average of $2.12 per gallon of regular-grade gasoline this year and only $2.30 per gallon next year, while diesel fuel users are projected to pay $2.26 per gallon, on average, in 2009 and $2.48 per gallon in 2010. However, that news is less welcome for fuel efficiency advocates and producers of competing energy sources, such as biofuels, who are facing narrow profit margins. See the EIA’s “Short-Term Energy Outlook” and the accompanying chart of World Liquid Fuels Consumption.