The US’s Energy Information Administration has cut its oil demand growth forecast for 2012 by 130,000 barrels a day, on data suggesting poor economic growth prospects in consumer countries.
The EIA also slashed its demand growth forecast for 2013 by 360,000 bpd to 730,000 bpd.
As a result of weak demand and sufficient supply, the EIA estimates the Brent benchmark oil price to average $106 in 2012 and $98 in 2013. Brent is currently at $98, as Norway’s intervention in an industrial dispute between North Sea oil workers and their employers reduces fears of a shut in.
The EIA said its revision reflects “shifts in expectations about oil market balances and the additional downside risks that are currently dominating market sentiments.”
Demand growth fears centre on the Eurozone and recent China data which suggest the giant oil consumer’s growth rate is in for a harder landing than previously thought. There are reports China is hoarding 91 million tonnes of coal, a record. The People’s Bank of China cut interest rates last week in an effort to goose the economy.
In Europe, another fix for the Eurozone has proved temporary as Spanish benchmark bonds have returned to unsustainable levels above 7% on debt markets.
Growth in Brazil, another key oil import market, is also slowing. The International Monetary Fund predicts growth will be 5.7% this year, down from 6.3% in 2011.
