The US Energy Information Administration Tuesday lowered its forecast for global oil demand in 2012 to 88.81 million b/d, down 150,000 b/d from a month earlier, according to its April Short-Term Energy Outlook.
The revision by EIA puts year-on-year oil demand growth in 2012 at 890,000 million b/d.
The global oil demand estimate for 2011 was revised up by 20,000 b/d, to 87.92 million b/d, according to EIA.
Growth in global oil consumption is expected to accelerate over the next two years, EIA said, with consumption reaching 90.11 million b/d in 2013, after a 220,000 b/d downward revision by EIA.
Total liquids supply is expected to increase by 1.81 million b/d, 850,000 b/d from countries outside of OPEC and 970,000 b/d of crude oil and non-crude liquids from OPEC-member countries.
The larger increase in total supply compared with consumption growth is misleading, however, EIA noted, as the 2011 balance between supply and consumption resulted in a supply shortfall of 770,000 b/d that contributed to a decline in world inventories, including the coordinated drawdown in government-held stocks in countries belonging to the Organization for Economic Cooperation and Development last summer.
Consequently, the change in the supply-demand balance for 2012 reflects the increase in supply over last year that is forecast to maintain stocks near current levels.
Several uncertainties could push oil prices higher or lower than projected, EIA said, as a number of non-OPEC countries are currently undergoing supply disruptions.
"Oil prices could be higher than projected in this Outlook if their recoveries from the disruptions are slower than forecast, additional disruptions occur, or supply growth is lower than expected," EIA noted.
In addition, uncertainty and market anxiety regarding the effects of the impending European Union embargo and other sanctions targeting Iranian crude oil imports could further bolster oil prices.
On the demand side, if the pace of global economic growth fails to recover in countries belonging to the OECD, or if economic growth slows in non-OECD countries, prices could be lower, EIA said.
Meanwhile, EIA revised non-OPEC crude oil supply higher by 210,000 b/d in 2012 to 52.67 million b/d and by a further 300,000 b/d in 2013 to 53.52 million b/d. For 2011, non-OPEC supply was revised up 50,000 b/d to 51.83 million b/d, EIA data showed.
The largest area of non-OPEC growth will be North America, where production increases by 560,000 b/d and 180,000 b/d in 2012 and 2013, respectively, will result from continued production growth from US onshore shale plays and Canadian oil sands.
In Brazil, output is to rise annually by an average of 130,000 b/d over the next two years, with increased output from its offshore, presalt oil fields.
Production will also rise in China and Colombia over the next two years, while production is expected to decline in Russia, Mexico, and the North Sea, EIA said.
Civil conflict in Yemen and Syria continues to compromise a considerable portion of each country's oil output, EIA added.
Yemen's production is already impaired by an ongoing outage to the Marib pipeline and EIA projects that Yemen's production will average 180,000 b/d in 2012, and 200,000 b/d in 2013, down from the country's pre-crisis production level of around 260,000 b/d.
Due to heightened unrest, EIA expects Syria to produce 260,000 b/d in 2012 and 360,000 b/d in 2013, still below the country's pre-crisis production level of 400,000 b/d.
