Current slowdown in economic growth is contributing to the recent decline in oil demand
The U.S. Energy Information Administration on Tuesday cut its forecast for non-OPEC oil production growth for 2009 to 730,000 barrels per day from its prior forecast of 890,000 bpd.
In its October short-term energy outlook, EIA also lowered its forecast for non-OPEC oil production in 2008 to 48.78 million bpd from its previous
forecast of 49.03 million bpd.
Separately, OPEC is expected to pump 32.44 million bpd of oil in fourth quarter, down from the EIA's prior estimate of 32.83 million bpd. For 2009, OPEC's output is expected to average 31.59 million bpd, down from the 32.05 million bpd the agency forecast last month.
EIA said that unless the global economy is weaker than anticipated, it expects demand for OPEC crude will exceed the producer group's output over the next six months.
'The current slowdown in economic growth is contributing to the recent decline in oil demand and the sharp decline in prices since July. Nonetheless, oil markets are expected to remain relatively tight because of sluggish production growth,' EIA said in its monthly forecast.
Without a major worldwide economic downturn that significantly hurts global demand, the price for West Texas Intermediate (WTI) oil should average about $112 a barrel this year and for 2009, the agency said.
For the short term, tight oil markets over next months will help to push WTI crude oil prices to $120 by next April, before dropping to $106 by the end of next year, the EIA said.
'Further deterioration in actual or expected global economic growth as a fallout of the current financial crisis may lead to weaker oil prices,' the agency said.