13 Nov 2008;economictimes.indiatimes.com:WASHINGTON: The weak US economy will slash America's oil demand this year by 1.1 million barrels per day, or 5.4 per cent, the first time annual
oil consumption will fall by more than 1 million bpd since 1980, the federal Energy information Administration said on Wednesday. For 2009, total US oil demand was projected to drop by an additional 250,000 bpd, or 1.3 per cent, the Energy Department's analytical arm said in its new monthly forecast.
"The current US and global economic downturn has led to a decrease in global energy demand and a rapid and substantial reduction in crude oil and other energy prices," the agency said.
The EIA lowered its estimate for US real gross domestic product growth to 1.3 per cent this year and projected GDP will decline by 1.4 per cent in 2009.
The US average unemployment rate was expected to jump to 7.9 per cent next year, the EIA said.
World real GDP growth was projected to slow from about 4 per cent in 2006 and 2007 to about 2.5 per cent this year, and to 1.8 per cent in 2009, the agency said.
Global oil demand was expected to increase by only 100,000 bpd this year and remain virtually flat next year, the EIA said.
Between 2007 and 2009, oil consumption in non-industrialized countries, especially China, Latin America and the Middle East, was projected to rise by 2.3 million bpd, which will be offset by a 2.2 million bpd decline in demand in industrialized nations, including the United States and the European Union, the agency said.
As a result of the sputtering economy and lower petroleum demand, the price for the US benchmark West Texas Intermediate oil will average $63.50 a barrel next year, the EIA said.
The agency said OPEC's planned oil production cut of 1.5 million bpd "may limit, but not reverse" the recent sharp drop in oil prices.
EIA said it expects OPEC's crude oil production to drop from 32.3 million bpd in October to 31.3 million during the first quarter of 2009 and remain relatively stable through the end of next year. The 1 million bpd decline would represent about 70 percent of OPEC's announced production cut.
"We project oil prices to remain relatively flat, averaging $60 to $65 per barrel throughout 2009," the EIA said. Oil hit a record $147 a barrel in July.
"The condition of the global economy is expected to remain the most important factor driving world oil prices," the agency said.
