Weak economy to further cut US oil demand - EIA

07 October 2008 19:26  [Source: ICIS news]

HOUSTON (ICIS news)--A slackening economy and record high prices have prompted the Energy Information Administration (EIA) to revise its projections for US oil demand sharply lower, in a report issued on Tuesday.

Domestic daily US consumption of oil products in 2008 was now projected to drop by 830,000 bbl/day to 19.8m bbl/day.

That was a deeper drop than the 610,000 bbl/day decline projected in last month’s Short Term Energy Outlook from the EIA.

"Consumption of all petroleum products has fallen in 2008, driven down by the increase in prices and the weakening economy," the EIA said.

"The declines in consumption are expected to continue in 2009 but at a much lower rate," it said.

The agency projected that the 2009 decline would be a further 100,000 bbl/day.

The slowdown in oil consumption in the US and other industrialised economies would offset solid growth in developing countries, especially China, Latin America, and oil-exporting countries in the Middle East, the EIA said.

West Texas Intermediate (WTI) crude oil was now forecast to average $112/bbl in 2008, down from the September projection of $116/bbl.

The 2008 average US retail gasoline price forecast has been trimmed to $3.56/gal (€0.70/litre) from September's projected $3.88/gal, while the diesel forecast has been lowered to $4.01/gal from $4.09/gal.

($1 = €0.74)

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By: Stephen Burns
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