The US government’s energy-tracking agency added to a chorus of concerns about falling demand for oil next year caused by an economic slowdown in China, the world’s largest crude importer.
Global crude consumption will be about 104.5mn barrels a day in 2025, down 200,000 barrels a day from a previous forecast, cutting next year’s projected demand growth rate to 1.6%, according to a monthly Energy Information Administration report on Tuesday. The downward revision was driven by concerns that China’s economy has been slowing.
China reported its weakest economic growth in five quarters last month, and traders and banks have flagged slowing demand in Asia as a bearish factor for crude. The concerns have helped keep oil prices restrained this year even as Opec and its allies dial back production and the conflict in the Middle East raises the risk of supply disruptions in the region.
Despite signs of an economic slowdown across the Pacific, jet fuel remains a bright spot in US consumption. Increased air travel led to an upward revision in projected demand for the fuel this year, and next year’s consumption is still expected to exceed pre-pandemic levels, the EIA said.
The EIA also dialled back forecasts for US oil production growth amid a wave of corporate consolidation and efforts to boost output while using less gear. While the EIA still expects US production to increase this year and next, its forecasts were revised down from last month’s report by 0.2% for this year and 0.6% for 2025.
The figures are the latest sign the US shale patch is growing more modestly after last year’s surprising pop in production that added more than 1mn barrels a day.
Still, the expansion in annual US oil production — the EIA projects 2.3% growth this year to 13.23mn barrels a day and an additional 3.5% increase next year — shows producers are achieving the efficiency gains in drilling and fracking that allows them to grow output.
“We are clearly doing more with less and becoming more operationally efficient each quarter,” Diamondback Energy Inc, one of the biggest producers in the Permian Basin of West Texas and southeast New Mexico, wrote in a letter to stockholders this week.
The Permian, which is the world’s largest shale field, is forecast to add a modest 20,000 barrels a day through the end of this year and another 340,000 barrels of production next year, according to the latest EIA projections.
