US EIA lowers forecast for global oil demand and US oil production

Yesterday oil prices continued along the zigzag course they have been following since the beginning of the week. Falling US equity markets ensured that prices came under pressure in the afternoon and ultimately closed trading just shy of 4% down. What is more, the US EIA undertook a surprising downward revision of its demand forecast yesterday evening, and now expects global oil demand to grow by only 1.2 million barrels per day this year and by 1.3 million barrels per day next year. 

This is a significantly more pessimistic prediction than that of the International Energy Agency, which so far envisages demand increases of 1.6 million and 1.4 million barrels per day respectively. The IEA will be publishing its latest estimates tomorrow. As anticipated, the EIA has adjusted its estimate for US crude oil production downwards to take account of the fact that production in the first half of 2015 was lower than previously assumed. 

Crude oil production between July 2015 and December 2016 thus looks set to be 140,000 barrels per day lower on average than previously thought and already this month to dip below the 9 million barrels per day mark. Previously, the EIA was not expecting this to happen until February 2016. 

"Production is expected to bottom out at a good 8.6 million barrels per day in August 2016, equivalent to a decline of roughly 1 million barrels per day as compared with its April 2015 peak. The US Department of Energy will be publishing the official inventory data this afternoon. Yesterday evening, the API reported that US crude oil stocks had risen more sharply than anticipated, namely by 2.1 million barrels", says Commerzbank.