DOE Lowers Oil Demand Estimates for First Half '05

The Energy Information Administration (search) on Tuesday lowered its forecasts for world and U.S. oil demand during the first half of this year, though the forecasts remained higher than recent estimates from the International Energy Agency and actual year-ago demand.

The Energy Department's (search) division said world oil demand for the first quarter should average 84.5 million barrels per day (bpd), unchanged from last month's forecast. But it revised its estimate of global demand in the second quarter down by 100,000 bpd to 82.7 million bpd.

By comparison, the International Energy Agency's (search) recent monthly forecast said world oil demand would be 84.2 million bpd in the current quarter and 82.4 million bpd during the second quarter.

The IEA helps coordinate energy supplies and energy policy among the industrialized nations.

The U.S. EIA said world oil demand is likely to grow by 2 million bpd, or about 2.4 percent, a year in 2005 and 2006. That would be lower than the 2.6 million bpd, or 3.4 percent, growth seen last year.

"Lower global oil demand growth is attributed to several factors, including the impact of high world oil prices and slower projected Chinese oil demand growth," EIA said.

Despite high energy prices, the growing global economy has helped push U.S. and world oil demand above levels from last year.

World oil demand is lower mostly because of the expected drop in U.S. oil use. The United States is the world's biggest oil consumer.

The EIA said U.S. oil use in the first quarter should average 20.79 million bpd, down 90,000 bpd from its estimate last month. It lowered its estimate for U.S. demand in the second quarter by 70,000 bpd to 20.61 million bpd.

Projected lower natural gas prices due to large U.S. gas inventories will contribute to lower domestic oil demand, as industrial users switch from higher-priced petroleum as fuel, said EIA analyst Dave Costello.

U.S. demand for distillates, which include heating oil and diesel fuel, should average 4.35 million bpd during the current quarter, down from the EIA's prior estimate of 4.41 million bpd. Distillate demand is forecast at 4.03 million bpd in the second quarter, down from 4.09 million bpd.

The EIA expects U.S. drivers to use 8.94 million bpd of gasoline in the first quarter, down 30,000 bpd from the previous estimate. Gasoline demand in the busy spring driving season of the second quarter should average 9.30 million bpd, down 40,000 bpd from the EIA's earlier forecast.