WASHINGTON - The U.S. Energy Information Agency is set to release a world fuel demand forecast on Tuesday that analysts expect will add to the dismal petroleum outlook for 2009.
Last month, EIA forecast world oil demand would drop by 810,000 barrels per day in 2009 compared with last year, down 200,000 bpd from its estimate in December.
"The market is anticipating we'll see some further downward revision on the demand side of the market, of course we don't know how much," said Tim Evans, energy analyst for Citi Futures Perspective.
If the EIA were to revise its forecast further downward to show 2009 oil demand will fall as much as 1 million bpd, Evans said "we would likely see a bearish price reaction."
Global oil consumption has fallen precipitously as major world economies fell into recession and the statistical wing of the Department of Energy said 2008 was likely the first year world energy demand dropped since 1983.
Jim Ritterbusch, president of Ritterbusch and Associates, said he expects the EIA to forecast a bigger decline in world oil demand Tuesday, but added the downward revision should not be larger than 300,000 bpd.
"The bottom line is we're still going to highlight a reduction in demand throughout 2009, and that's not going to help the market," Ritterbusch said.
Forecasts for shrinking global energy demand threaten government revenue for OPEC member nations.
As traders wait for OPEC's next meeting on March 15, Evans said a major downward revision for 2009 could "renew concerns about whether OPEC would be able to cut production enough to support prices."
Oil prices have already fallen more than $100 since last July due to the effects of the economic slowdown.
OPEC's secretary general said Monday that the group was willing to deepen cuts further if needed, but Algeria's oil minister added later in the day that current oil prices were acceptable for now and that many OPEC members could not afford to deepen their cuts.
The EIA's report is first of three major oil demand forecasts to come out this week. The International Energy Agency is scheduled to release its monthly supply and demand outlook on Wednesday and OPEC's monthly report will be released on Friday.
Phil Flynn, an analyst at Alaron Trading in Chicago, said any negative news out of the EIA's report might be offset by passage of the economic recovery package by the Senate.
"That could provide a little psychological boost, but at the end of the day if the (EIA report) is very bearish...we better get ready to write a check for another trillion dollars," Flynn said.
Last month, EIA forecast world oil demand would drop by 810,000 barrels per day in 2009 compared with last year, down 200,000 bpd from its estimate in December.
"The market is anticipating we'll see some further downward revision on the demand side of the market, of course we don't know how much," said Tim Evans, energy analyst for Citi Futures Perspective.
If the EIA were to revise its forecast further downward to show 2009 oil demand will fall as much as 1 million bpd, Evans said "we would likely see a bearish price reaction."
Global oil consumption has fallen precipitously as major world economies fell into recession and the statistical wing of the Department of Energy said 2008 was likely the first year world energy demand dropped since 1983.
Jim Ritterbusch, president of Ritterbusch and Associates, said he expects the EIA to forecast a bigger decline in world oil demand Tuesday, but added the downward revision should not be larger than 300,000 bpd.
"The bottom line is we're still going to highlight a reduction in demand throughout 2009, and that's not going to help the market," Ritterbusch said.
Forecasts for shrinking global energy demand threaten government revenue for OPEC member nations.
As traders wait for OPEC's next meeting on March 15, Evans said a major downward revision for 2009 could "renew concerns about whether OPEC would be able to cut production enough to support prices."
Oil prices have already fallen more than $100 since last July due to the effects of the economic slowdown.
OPEC's secretary general said Monday that the group was willing to deepen cuts further if needed, but Algeria's oil minister added later in the day that current oil prices were acceptable for now and that many OPEC members could not afford to deepen their cuts.
The EIA's report is first of three major oil demand forecasts to come out this week. The International Energy Agency is scheduled to release its monthly supply and demand outlook on Wednesday and OPEC's monthly report will be released on Friday.
Phil Flynn, an analyst at Alaron Trading in Chicago, said any negative news out of the EIA's report might be offset by passage of the economic recovery package by the Senate.
"That could provide a little psychological boost, but at the end of the day if the (EIA report) is very bearish...we better get ready to write a check for another trillion dollars," Flynn said.
