EIA trims 2013 China oil demand growth to 4.1%

Jun 11, 2013 12:00 AM

-- 2014 U.S. oil output to hit 26-year high

-- U.S. 2014 oil output below month-earlier forecast

-- U.S. 2014 oil output to top net imports by 1.3 million barrels a day

Oil demand in China, the world's second-biggest oil consumer after the U.S., will grow by 4.1% this year, slightly less than the 4.4% rate projected last month, according to U.S. government forecasters.

Scanning the global energy landscape in its monthly forecast, the Energy Information Administration also modestly trimmed strong growth estimates for U.S. oil production for this year and next. But the forecasters said rising production in North America threatens to help outstrip the expected growth in global oil demand.

The EIA projects that suppliers outside the Organization of the Petroleum Exporting Countries, including North America, will boost output by 1.19 million barrels a day this year, topping the expected rise in global demand growth by 320,000 barrels a day. OPEC, which has kept a lid production for months, earlier Tuesday said non-OPEC supply will only top demand growth by around 200,000 barrels a day.

In the U.S., the world's largest oil consumer, demand for gasoline, the most widely used petroleum product, will drop to 12-year low for the peak summer driving season, the EIA said. Gasoline use will fall by 0.8% from a year earlier, a larger drop than the 0.3% decline projected by the EIA last month.

Gasoline prices are expected to average $3.53 a gallon nationwide for regular fuel in the driving season, down 16 cents a gallon from a year earlier. Rising oil output in the U.S. and Canada will lower crude oil prices through 2014 compared with 2012 levels, the EIA said. U.S. benchmark West Texas Intermediate crude oil is expected to average $93.25 a barrel this year and $91.96 a barrel in 2014, down from $94.12 in 2012.

Global benchmark North Sea Brent crude is expected to average $104.65 a barrel this year and $99.75 a barrel in 2014, compared with $111.65 in 2012. Brent hasn't averaged below $100 a barrel since 2010.

The EIA projects U.S. oil demand this year will inch up by 0.5%, or 90,000 barrels a day, to 18.64 million barrels a day, after average declines of 315,000 barrels a day in the past two years. Demand in 2014 will be near 18.63 million barrels a day, the EIA projected.

Oil demand in the developing countries outside of the Organization for Economic Cooperation and Development topped that of OECD nations in April for the first time ever, the EIA said, led by growth in China and the Middle East. OECD oil demand is expected to drop 1.1% this year, compared with 2012, while non-OECD growth will rise by 3.1%

China's oil-demand growth this year will be 420,000 barrels a day, or 4.1%, accounting for 48% of global oil-demand growth. China's demand will hit 10.65 million barrels a day this year, down from the May projection of 10.68 million barrels a day.

In 2014, non-OECD demand will top that of the OECD by 720,000 barrels a day, the EIA said, as non-OECD slips 0.5% and the developing nations record another year of 3.1% growth in oil consumption.

China's oil demand will grow next year by 4%, or 430,000 barrels a day, to 11.08 million barrels a day. That's a reduction from the May forecast for 4.4% growth, to 11.15 million barrels a day. China will account for 36% of global growth in 2014, the EIA projected.

Growth in U.S. oil production, with surging flows from shale-oil fields, will average 12.2% this year, down from the 14.2% growth projected a month earlier. Output of 7.29 million barrels a day will hit a 22-year high but will be slightly less than the 7.42 million barrels a day projected in May. Output in 2014 is expected to rise 11% to hit a 26-year high of 8.09 million barrels a day.

Rising U.S. output from North Dakota and elsewhere, using hydraulic fracturing and horizontal drilling techniques, is reducing U.S. dependency on crude oil imports. Output is expected to top net crude oil imports in October and in 2014 will top net imports by 1.3 million barrels a day, according to the EIA forecast. That would mark the first time annual output topped net crude imports since 1993, and the margin would be the largest in 23 years, EIA data show.

The EIA said OPEC increased May output to 30.48 million barrels a day, from a revised estimate of 30.23 million barrels a day in April. Output in May was the highest since September. The group agreed on May 31 to hold to an output cap of 30 million barrels a day.

The group's spare capacity fell to 2.4 million barrels a day as Saudi Arabia, Libya, Nigeria and Angola increased production.

The EIA said non-OPEC output will rise by 1.2 million barrels a day in 2013, topping global oil-demand growth by 320,000 barrels a day. In 2014, non-OPEC supply growth of 1.6 million barrels a day will top global demand growth by 410,000 barrels a day.

As supply growth outpaces demand growth, oil inventories held in OECD nations are expected to rise. The EIA said OECD oil stocks are expected to be 2.64 billion barrels at the end of 2013, near the year earlier level, and sufficient to cover 57.3 days of projected demand. OECD inventories are expected to reach 2.68 billion barrels at the end of 2014, enough to cover 58.3 days of demand.

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