EIA revised forecast of slowing China oil demand didn't help much either!
World oil demand to slow in 2006: EIA November 9, 2005 - 9:59AM
World oil demand will slow in 2006 due mostly to less petroleum use by China, while oil consumption in the United States will rise slightly more than previously expected, the US government's top energy forecasting agency says.
In its monthly energy forecast, the federal Energy Information Administration revised down its estimate for global oil demand growth next year by 100,000 barrels per day (bpd) to 1.8 million bpd, up from growth of 1.1 million bpd for 2005.
The slowdown in 2006 demand reflected a 100,000 drop in China's expected oil consumption, which the agency said should now rise by 500,000 bpd next year, still more than the 400,000 bpd growth forecast for this year.
Ironically, total global oil demand growth in 2006 would slow just as OPEC's ability to produce more crude was expected to increase, the EIA said.
The agency forecast a slight increase in OPEC spare oil production capacity next year to 2 - 2.5 million bpd from this year's one - 1.5 million bpd. The EIA said this "should allow for some easing of tight oil market conditions in 2006."
Nonetheless, OPEC crude oil output was expected "to remain flat" next year at about 30 million bpd, the EIA said.
Oil production from non-OPEC countries outside of the United States was forecast to grow by about 700,000 bpd in 2006, with more supply coming from Azerbaijan, Kazakhstan, Canada, Brazil and West Africa, the agency said.
For the United States, which is the world's biggest energy consumer, the EIA revised up its estimate for oil demand this year by 30,000 bpd, even though overall consumption would fall by 160,000 bpd from 2004 as higher energy prices after the recent hurricanes discouraged petroleum consumption in the last quarter.
This year would be the first time since 2001 US oil demand fell on an annual basis and it would be the biggest yearly demand drop since 1991, the EIA said.
For 2006, US oil demand recovered, rising an average 470,000 bpd from this year. That was 10,000 bpd higher than the EIA had forecast in its October report.
The agency said it would take about three months longer than anticipated for US oil and natural gas production in the Gulf of Mexico to return to pre-hurricane levels, with a complete recovery now not expected before the end of June next year.
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