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Friday, September 21, 2018

Oil demand could increase by 1.2 million barrels per day in 2003 - EIA

According to the US Department of Energy, Energy Information Administration, EIA’s current Outlook estimates world oil demand growth of over 0.6 mbd in 2002, with a demand turnaround beginning in the 3rd quarter.  With the expected recovery of the economy in 2003, particularly in the United States where GDP growth is projected to reach over 3% annually, oil demand could increase by 1.2 mbd in 2003, with half of this coming from the United States.

OPEC production in May is estimated to have risen by about 0.8 mbd over April levels, but the bulk of this came with the end of Iraq’s self-imposed embargo. OPEC 10 production has apparently increased since February, rising by an estimated 0.56 mbd over the last 3 months.  However, EIA’s current Outlook assumes that OPEC production will need to rise further over the rest of 2002 in order to prevent prices from rising above OPEC’s target range. The expected turnaround in world oil demand in the second half of 2002, combined with OPEC’s very low quota level, is projected to reduce world oil inventories rapidly unless OPEC 10 increase their production by another half million barrels per day by year’s end.

Total US petroleum products demand for 2002 is projected (under the current base case scenario) to average 19.67 mbd, little changed from the 2001 average.  Continued increases in motor gasoline demand, buoyed by increases in real disposable income, are expected to be offset by demand declines in the other major petroleum products.  Despite projections of a positive year-over-year growth in industrial production later in the year, the recent weakness in industrial activity, record warm weather for the first quarter, and the (related) increased availability of natural gas compared to early 2001 account for the 2.4% decline in distillate demand projected for the year.

In 2003, petroleum demand is expected to respond to acceleration of the economy as well as assumptions of normal weather.  Total demand is projected to average 20.3 million barrels per day in the base case, an increase of 0.63 mbd, or 3.2%, from that of the previous year.  That would be the first time in which total annual petroleum demand has averaged more than 20 mbd.  Motor gasoline demand is projected to climb by an accelerated 2.6%, buoyed by brisk growth in income and employment.  Reversing the current year’s projected decline, distillate fuel oil demand is projected to climb 3.5%, with substantial increases in transportation, heating, and industrial sectors.  Jet-fuel demand, reflecting continued recovery in flight activity, is projected to climb 7.3%, surpassing the levels reached in 2000.

Average domestic oil production is expected to increase by 0.042 mbd or 0.7% in 2002, to a level of 5.89 mbd.  For 2003, a 0.3% increase is expected and results in an average production rate of 5.91 million barrels of oil per day for the year.