UPDATE: EIA: 4Q US Oil Use Seen At 18.86M B/D, -2.3% Vs Yr

(updates with economic forecast, price outlook and stocks data)

By David Bird

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--U.S. oil demand in the fourth quarter is expected average 18.86 million barrels a day, down 2.3% from a year earlier, but is expected to rebound in the 2010 first quarter, to 18.97 million barrels a day, a 0.7% rise from a year earlier, government forecasters said Tuesday.

Full-year 2009 oil demand in the world's largest energy consumer will be the lowest since 1997, at 18.72 million barrels a day, down 4% from a year earlier, marking the fourth straight year of lower demand. But demand in 2010 is expected to rebound by 1.5% to 19.01 million barrels a day, led by an expected 3% gain in distillate fuel (diesel/heating oil) demand as the improving economy boosts diesel fuel use. The 2010 level still would be some 8.6% below the peak demand of 20.8 million barrels a day hit in 2005.

The figure for the current, fourth quarter is revised down 0.6%, or 110,000 barrels a day, from the October forecast by the Energy Information Administration. Fourth-quarter demand for gasoline, distillate fuel and jet fuel were all revised down modestly from the October forecast. In the first quarter 2010, distillate use was revised up from the October forecast by 6%, or 220,000 barrels a day, to 3.84 million barrels a day, but was down 1.8% from a year earlier. Gasoline use in the 2010 first quarter was revised down 2%, to 8.84 million barrels a day, but would be up 0.6% from a year earlier.

The EIA said it expects U.S. real gross domestic product to decline by 0.3% in the fourth quarter from a year earlier, compared with the October forecast for a 0.4% decline. For all of 2009, real GDP is expected to decline by 2.4%, compared with the October forecast of a 2.5% decline. In 2010, GDP growth is expected to be 1.9%, compared with the projected 1.8% rise in the October forecast.

The crude oil price forecast was raised by $7 a barrel from a month earlier, to $77 a barrel this winter. In the current quarter, the EIA said benchmark West Texas Intermediate crude oil will average $77.41 a barrel. In 2010, the EIA sees the price averaging $78.13 up from the expected 2009 average of $62 a barrel. The 2009 price is a 37.7% decline from the record high of $99.57 a barrel in 2008.

"If the economic recovery stalls and oil consumption does not rebound, oil prices could weaken given the high level of inventories" worldwide," the EIA said.

US demand for distillate fuel (heating oil/diesel) will average 3.74 million barrels a day this winter, down 186,000 b/d, or 4.7%, from a year earlier, and at the weakest level since the winter of 1998-99, the EIA forecasts show. Despite lower demand, rising oil prices led the EIA to push up its forecast for home-heating oil bills this winter. Erasing a projected 2% drop in heating bills in the October forecast, the EIA said heating oil bills will rise 4.1% this winter.

Distillate stocks are projected to end December at 165.5 million barrels, up 13.4% on a year ago and the most since 1982. At the end winter, end-March 2010 stocks are expected to be 132 million barrels, or 8% below extremely high year-earlier levels. End-March 2009 stocks were the most since 1981 and were 41.2 million barrels, or 33%, above the 2008 level.

-By David Bird, Dow Jones Newswires, 212-416-2141; david.bird@dowjones.com

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(END) Dow Jones Newswires

November 10, 2009 15:36 ET (20:36 GMT)


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