The EIA lifted its forecast for 2024 U.S. oil demand by 100,000 bpd to 20.5 million bpd. It left its 2024 world oil demand growth forecast unchanged, with consumption increasing year-over-year by 1.1 million bpd to 102.9 million bpd.
U.S. oil production, meanwhile, will grow by 300,000 bpd this year to a record 13.23 million bpd, the EIA said, slightly lower than its last forecast which saw production up by 320,000 bpd this year.
In the Permian basin, the largest U.S. oilfield, production is set to grow by 10,000 bpd this month to 6.39 million bpd.
Even with a tighter market, the EIA lowered its outlook for West Texas Intermediate crude prices for the year to $80.21 a barrel, down 2.2% from its prior forecast of $82.03 a barrel. That follows recent sell-offs sparked by concerns about the economy, the agency said.
Oil markets this week fell to their lowest level since January amid concerns about a recession. They were up slightly on Tuesday, with Brent trading around $76.63 a barrel and WTI trading at 73.27 a barrel.
Despite the cut to the average annual price forecasts, the agency expects Brent futures to rise in the months ahead and range between $85 and $90 by the end of the year, largely on production cuts by the OPEC+ group pushing inventories lower.
UBS analyst Givoanni Staunovo said the EIA update was a modestly bullish revision due to the slightly larger deficits expected through this year and next.
The agency lowered its forecast for 2025 world oil demand to 104.5 million bpd, versus a previous forecast of 104.7 million bpd. Majority of that reduction is due to slowing economic growth in China, the EIA said in its report.
The EIA also cut its forecast for 2024 U.S. natural gas production to 103.3 billion cubic feet per day, down from 103.5 bcfd previously. It anticipates 2025 production at 104.6 bcfd, compared with a forecast of 105.2 bcfd in its previous outlook.
U.S. gas prices have fallen sharply over the past two months. Henry Hub futures were trading around $2.016 million British thermal units on Tuesday.
