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EIA Reduces Oil Demand Projections for the U.S. and Global Markets in 2025
EIA Reduces Oil Demand Projections for the U.S. and Global Markets in 2025

EIA Reduces Oil Demand Projections for the U.S. and Global Markets in 2025

  • 10-Oct-2024 4:00 AM
  • Journalist: Jacob Kutchner

The U.S. Energy Information Administration (EIA) has significantly adjusted its oil demand forecasts for both the United States and the global market for the upcoming year, attributing these changes to a slowdown in economic activity, particularly in China and North America. In its latest Short-Term Energy Outlook report, the EIA projects that global oil demand will increase by 1.2 million barrels per day (bpd) to reach 104.3 million bpd in 2025. This figure is approximately 300,000 bpd lower than previously anticipated. For the current year, global demand is estimated to be around 103.1 million bpd, which reflects a downward adjustment of 20,000 bpd from earlier forecasts.

The EIA's revisions for this year primarily stem from a decline in crude imports and reduced refinery operations in China, the leading buyer of crude oil on the international stage. Concerns about diminishing industrial production and slower manufacturing growth in both the U.S. and Canada have influenced the downward adjustments for next year’s forecasts.

Specifically, the EIA anticipates that U.S. oil demand will rise to 20.5 million bpd next year, a slight decrease from the earlier forecast of 20.6 million bpd. The demand projection for 2024 remains steady at 20.3 million bpd. The EIA also notes that U.S. oil production is set to reach record levels, albeit slightly below prior estimates. For this year, the agency expects the U.S. to produce 13.22 million bpd, down from an earlier forecast of 13.25 million bpd.

Looking ahead to 2025, U.S. oil production is now projected to average 13.54 million bpd, representing a 1% decline from the previous estimate of 13.67 million bpd. In conjunction with these demand and production adjustments, the EIA has lowered its price forecasts for oil as well. It now expects U.S. crude oil prices to average around $76.91 per barrel in 2024, reflecting a 2.4% decrease from earlier projections. For 2023, Brent crude prices are anticipated to average $80.89 per barrel, also a reduction of 2.3% from earlier forecasts.

The divergence among major oil market forecasters remains pronounced, with the IEA projecting an oil demand increase of 950,000 bpd for next year, while OPEC estimates a more significant rise of 1.74 million bpd. Additionally, there are discrepancies in demand growth forecasts for 2024; the EIA sees growth at 940,000 bpd, the IEA at 900,000 bpd, and OPEC expecting over 2 million bpd.

These adjustments highlight the ongoing uncertainty in the oil market, driven by various factors including global economic trends and the transition to alternative energy sources. As economic conditions fluctuate, so too do the projections for oil demand and production, underscoring the complexities of the global energy landscape.

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