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STEO Highlights: EIA sees oil demand growing slower than previously expected

Houston — The US Energy Information Administration said Tuesday that it expects global oil consumption to average 101 million b/d in 2019, up 1.1 million b/d from 2018, an indicator that demand is growing at a slower rate than previously expected.

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That 1.1 million b/d in growth is 200,000 b/d lower than what EIA forecast in June and marked the sixth straight month that the EIA lowered its forecast for global oil consumption in 2019.

"The downward revision for 2019 reflects lower-than-expected oil consumption so far this year, in addition to slowing economic growth in many of the world's largest oil-consuming countries," EIA said in its Short-Term Energy Outlook.

Oil consumption in Q1 2019 in OECD countries was 350,000 b/d lower than forecast in last month's STEO, largely because of warmer-than-normal weather and slowing economic growth, EIA said.

And while US liquids demand will rise 200,000 b/d in 2019, that is down from 500,000 b/d of growth in 2018 and likely will be offset by declining liquid fuels consumption in Japan, Canada, and Europe, EIA said.

Liquid fuels consumption in non-OECD countries will increase by 1.1 million in 2019, largely on 550,000 b/d of demand growth in China, EIA said, but that growth in China is increasingly shifting toward HGLs for new petrochemical plants and away from transportation fuels, including gasoline and diesel.

"Were it not for the addition of these new petrochemical plants, China's liquid fuels demand growth would be less than 300,000 b/d in 2019," EIA said.

EIA forecasts global oil production to average 101.11 million b/d in 2019, outpacing demand by 110,000 b/d. World output is then forecast to climb to 102.55 million b/d in 2020, outpacing demand by 150,000 b/d, EIA said.

Other highlights of Tuesday's STEO report:

US OIL PRODUCTION

**EIA forecast US oil production to average 12.36 million b/d in 2019, up about 40,000 b/d from last month's forecast, and 13.26 million b/d in 2020, flat with last month's report.

**EIA forecasts US oil production to average 12.44 million b/d this month and cross the 13 million b/d threshold by March 2020. Last month, EIA said US oil production would cross that 13 million b/d mark by January.

**EIA forecasts that US crude oil and petroleum product net imports will average 600,000 b/d in 2019, down from an average of 2.3 million b/d in 2018. EIA forecasts the US to be a net exporter of crude oil and petroleum products at a rate of 100,000 b/d by Q4 and by an average of 500,000 b/d in 2020.

OPEC OUTPUT

**EIA estimated total OPEC output at 29.9 million b/d, down 30,000 b/d from May and the lowest since mid-2014.

**Saudi Arabia pumped 10.1 million b/d in June, after three months below 10 million b/d.

**EIA estimated Iranian oil production at 2.1 million b/d in June, down from 3.78 million b/d a year earlier, before US sanctions were re-imposed.

**Venezuelan oil production fell to 690,000 b/d in June, from 730,000 b/d in May, EIA said. EIA expects Venezuelan output to continue declining through the end of 2020 as a result of US sanctions against state-owned oil company PDVSA, widespread power outages and inefficient management of the country's oil industry.

**EIA expects OPEC production to average 30.19 million b/d in 2019 and 29.73 million b/d in 2020, down from 31.96 million b/d in 2018.

**EIA expects the production cuts agreed to by OPEC and non-OPEC partners led by Russia last week to contribute to a draw in global stocks in Q3 before global inventories build in Q4, creating a "generally balanced market in 2020."

**Iraq and UAE will be the main sources of crude production growth among OPEC members in 2019, EIA said, with Iraqi output climbing further in 2020.

**EIA said Iraq pumped 4.75 million b/d in June, down from 4.8 million b/d in May, and UAE pumped 3.15 million b/d in June, up from 3.1 million b/d in May.

PRICES

**EIA's oil price forecasts remained relatively flat with June.

**WTI is forecast to average $59.58/b in 2019, up 29 cents from last month's forecast, and $63/b for 2020, the same as last month's forecast.

**EIA now forecasts Brent to average $66.51/b in 2019, down 18 cents from last month, and $67/b in 2020, also the same as last month.

-- Brian Scheid, brian.scheid@spglobal.com

-- Meghan Gordon, meghan.gordon@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com