EIA reported that it revised the 2019 oil-weighted GDP growth rate from 2.9% in its January STEO to 2.2% in its July STEO. 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 Administration attributes lower than expected OECD oil consumption earlier this year to relatively warm weather in Europe in February and March, which:
- reduced heating oil consumption;
- slowing GDP growth;
- a slowdown in Europe’s manufacturing sector.
July's STEO forecast for 2019 also includes historical 2019 liquid fuels consumption data for the first quarter of the year for countries that are members of the Organization for Economic Cooperation and Development.
Most probably, weather cause for US liquid fuels consumption in the second quarter of 2019 to be less than EIA had forecast at the beginning of the year.
EIA's first estimations for May and June see the possibility that flooding in the Midwest had a negative impact on the planting season for some farms. Farmers reduced their consumption of diesel fuel for their farming equipment, as a result to the flooding.
Moreover, in the first half of 2019, Brent crude oil prices were $7/b higher than forecast in the January STEO. EIA expects Brent crude oil prices to average $66/b in 2019 and $67/b in 2020, or $6/b higher and $2/b higher, respectively, than the price forecasts in the January STEO.
Now, EIA foresees that the overall liquid fuels consumption amongst OECD members will remain close to 2018's level, which presents a decrease from previous expectations for most countries. The July STEO expects declining liquid fuels consumption in countries including Japan, Canada, and OECD Europe to be offset by consumption growth in the United States.
In light of the above, EIA expects that liquid fuels consumption in non-OECD countries to increase by 1.1 million b/d, a level of growth that is both lower than the previous two years and lower than expected in the January STEO. More than half of the 2019 non-OECD consumption growth is in China, where EIA expects the completion of new petrochemical plants will increase demand for hydrocarbon gas liquids.