US EIA cuts 2022 global oil demand outlook by 100,000 b/d on slower US jet fuel recovery

Rising oil supply from OPEC+, US oil producers and other sources will outpace global oil demand growth next year, the US Energy Information Administration said Aug. 10 in its latest Short-Term Energy Outlook.

EIA cut its estimate for 2022 global oil demand growth by 100,000 b/d from last month's outlook, now predicting demand will increase by 3.6 million b/d from 2021 to 101.3 million b/d in 2022.

That would put 2022 global oil demand above pre-pandemic levels for the first time, or 350,000 b/d above the 2019 average.

EIA cut its 2022 outlook for US jet fuel demand by 80,000 b/d to 1.6 million b/d, reflecting a lower GDP forecast and a slower-than-expected recovery in air travel.

As a result of the changes to its supply/demand outlook, EIA trimmed its estimates for 2022 oil prices by about 60 cents/b. It now sees WTI averaging $62.37/b and Brent averaging $66.04/b next year.

US gasoline prices averaged $3.14/gal in July, the highest monthly average since October 2014, EIA said. The pump prices reflect higher crude prices and rising wholesale gasoline margins, amid relatively low gasoline stocks, the report said.

WORK-FROM-HOME IMPACT

US employment growth and increased mobility led to higher-than-expected US gasoline demand in May through July, EIA said. It sees that trend continuing next year, although the assumption that a "relatively high share" of the workforce will continue working from home kept its 2022 demand outlook below 2019 levels.

It estimates US gasoline demand rising to 8.96 million b/d in 2022, up 180,000 b/d from expected 2021 demand but 350,000 b/d below 2019 levels.

EIA trimmed its 2022 outlook for US oil production by 80,000 b/d to 11.77 million b/d, up from an expected 2021 average of 11.12 million b/d. US producers pumped an estimated 11.2 million b/d in May, it said.

"We expect production to be relatively flat through October before it starts rising in November and December and throughout 2022," the report said.

EIA expects US oil output to top 12 million b/d by November 2022, but not reach the most recent high of 12.8 million b/d set in March 2020 before the pandemic set in.

OPEC crude production is expected to average 27.1 million b/d in the third quarter of 2021 and 28.7 million b/d in 2022, up from 25 million b/d in April.