Lower expectations on global economic growth this year will reduce anticipated oil demand around the world, the U.S.' Energy Information Administration (EIA) said in a statement on Thursday.
The EIA said it revised down its gross domestic product (GDP) growth rate expectation for 2019 to 2.2% in July, from its previous GDP growth estimate of 2.9% in January.
"If realized, this 2.2% growth rate would be the lowest annual growth rate since 2009 and one of the main reasons for slower growth in global liquids consumption," the statement said.
The EIA noted that it has also revised down its expectation for global liquids demand growth for six consecutive months.
Thus, the administration forecasts global liquid fuels consumption will grow by only 1.1 million barrels per day (bpd) in 2019, from 99.9 million bpd in 2018.
"This revision reflects slower expected economic growth in many of the world’s largest oil-consuming countries, lower than expected oil consumption so far this year, and higher crude oil prices," the statement said.
In addition, crude oil prices affect the price of fuel prices, the EIA said, adding that higher prices cause a decline in fuel consumption.
During the first half of 2019, the average price of international benchmark Brent crude was $7 per barrel higher than what was forecast by the EIA in the month of January.
The administration said it now expects Brent to average $66 per barrel in 2019 and $67 per barrel in 2020 - $6 a barrel and $2 a barrel higher, respectively, than what was estimated by the EIA in January, according to the statement.
By Ovunc Kutlu