U.S. Reduces Forecasts for Oil, Natural Gas Demand

Feb. 10 (Bloomberg) -- The U.S. reduced its forecasts for crude oil and natural-gas consumption this year as the global economic slowdown cuts fuel purchases.

World oil demand will average 84.7 million barrels a day, down 400,000 barrels, or 0.5 percent, from a forecast in January, the Energy Department said today in its Short-Term Energy Outlook. The estimate is down 1.17 million barrels from demand last year. Natural-gas consumption will decline 1.3 percent as factory owners shut plants in the deepening recession.

“The report reflects the economy, which is still getting a little weaker,” said Tancred Lidderdale, a government economist in Washington who supervised the monthly outlook.

U.S. oil demand will average 19.02 million barrels a day in 2009, down 460,000 barrels a day from 2008. The forecast was reduced by 100,000 barrels from last month’s report.

West Texas Intermediate crude oil, the U.S. benchmark, will average $43.14 a barrel in 2009, down from $43.25 estimated in January, the report from the department’s Energy Information Administration showed. Oil averaged $99.57 a barrel in 2008, according to the report.

Regular gasoline at the pump, averaged nationwide, will cost $1.95 a gallon this year, up 4.3 percent from $1.87 estimated in the January report. The average price last year was $3.25. The fuel will average $2.19 a gallon next year.

Heating Fuels

The government raised its estimate of winter fuel costs from last month. The heating season runs from October through March.

“We got the final numbers from October and November, which were higher than expected,” Lidderdale said. “A large number of consumers locked in their winter fuel costs in the summer, when prices were higher.”

Heating oil users will spend an average $1,606 this winter, up 5 percent from $1,530 forecast last month and 18 percent lower than the average $1,953 spent by households last winter.

Homeowners using natural gas will see average heating costs for the season of $870, up 3.7 percent from $839 forecast in January. The estimate is up 1.4 percent from an average $858 last winter, the report showed.

The 1.3 percent drop in U.S. natural gas consumption this year will take demand to an average 62.7 billion cubic feet a day. The drop was estimated at 1 percent last month.

Industrial gas demand will probably fall 5.1 percent to 17.3 billion cubic feet a day, and power generation use may fall 1 percent to 18 billion. The decline in industrial demand was greater than the 3 percent drop estimated in the January report.

Gas production in the U.S. may increase to 58.7 billion cubic feet a day this year from 58.6 billion in 2008. Output was estimated at 58.9 billion cubic feet a day in the January report.

“The biggest change in this month’s report was in natural gas,” Lidderdale said. “We had strong natural gas production growth in recent years because of the economy. Now that the economy is in recession there’s excess supply.”