US EIA raises forecast for global oil demand

Oil demand is growing more sharply than anticipated, as the US Energy Information Administration's (EIA) upward revision of its demand estimate yesterday showed. First and foremost it is likely to be US oil production which will cause the market to tighten. 

Oil output figures will be of great relevance to the market when the inventory data are published by the US Department of Energy later today. According to these data, total daily US oil production declined from over 9.6 million barrels in the summer to below 9.1 million barrels at the end of September, putting it at its lowest level since November. 

The EIA believes that production will continue to fall next year, regardless of any cost cuts or efficiency gains. In our view, the accelerated decrease in US (shale) oil production is the most important factor when it comes to restoring the balance on the oil market and achieving a sustained increase in the Brent price to over $60 per barrel during the course of next year, notes Commerzbank.