EIA cuts oil demand forecast in 2021 and 2022

Global oil demand could face downside risks due to the Omicron variant, the U.S. Energy Information Administration (EIA) said on Tuesday, lowering its forecast for global oil consumption for 2021 and 2022.

In its December Short-Term Energy Outlook (STEO), the EIA sees Global oil consumption has averaged 96.91 million barrels per day (bpd) this year, down 620,000 bpd from last month’s forecast of 97.53 million bpd. Next year, global oil consumption is expected to increase 3.7% from 2021, compared to an estimated 3.4% growth in November. The EIA predicts that global oil consumption will increase by 3.5 million barrels per day in 2022 compared to 2021.

However, the EIA estimate of average global oil demand in 2022 is now revised down to 100.46 million b / d, down 420,000 b / d from demand of 100, 88 million bpd expected in last month’s STEO.

EIA revised downwards its forecast for global oil demand for this quarter and the first quarter of 2022, in part due to recently announced travel restrictions following reported outbreaks of the Omicron variant.

“The potential effects of the spread of this variant are uncertain, which introduces downside risks to forecasts for global oil consumption, in particular for jet fuel,” the administration noted.

“The Omicron variant has introduced additional uncertainty in the oil markets for the coming months, and this uncertainty is reflected in the recent increase in oil price volatility,” the EIA said, noting that “the forecast is subject to change. to major revisions “.

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After five consecutive quarters of demand exceeding supply since the third quarter of 2020, global oil stocks have pulled an average of 1.7 million bpd. These stock withdrawals are expected to slow to 900,000 bpd this quarter, EIA says noted.

“With global oil inventories expected to continue to decline in December and supply and demand balancing relative to 1Q22, we expect limited upward pressure on prices to emerge in the months ahead. come, ”the administration said.

The EIA predicts that Brent crude prices will average $ 71 per barrel in December and $ 73 per barrel in the first quarter of 2022. For the full year 2022, Brent is expected to average 70 $ per barrel.

“For 2022 as a whole, we forecast that the production growth of OPEC +, tight reservoir oil from the United States and other non-OPEC countries will exceed the slowdown in the growth of global oil consumption. , especially in light of renewed concerns about COVID-19 variants, ”the EIA said.

By Tsvetana Paraskova for Oil Octobers

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Felix J. Dixon