NEW YORK (May 8): World oil demand this year is expected to grow less than earlier forecast and output should expand faster than previous estimates, resulting in a more balanced market, the US Energy Information Administration (EIA) said on Tuesday.

The agency hiked its production forecasts from regions outside the Organization of the Petroleum Exporting Countries (Opec), while also lowering its expectations of demand from developed economies, according to a monthly update of EIA's Short-Term Energy Outlook (STEO).

The EIA now expects global oil and liquid fuels consumption to grow by 920,000 barrels per day (bpd) this year to 102.84 million bpd, slightly smaller than the 950,000 bpd growth forecast in its April STEO.

Total world crude oil and liquid fuels production was forecast to rise by 970,000 bpd to 102.76 million bpd this year, compared with its previous estimate of an 850,000-bpd increase.

The improving market balance also led to a reduction in EIA's oil prices forecasts for the rest of the year.

It now expects spot Brent crude prices to average US$90 a barrel in the third quarter and decline to US$88.67 in the final quarter of the year. Its previous forecast saw Brent prices of over US$91 in the third quarter and over US$89 in the fourth.

For the US, the world's top oil producer, the EIA lowered its production forecast for this year to 13.20 million bpd, still a record high but slightly below its previous forecast of 13.21 million bpd.

Next year, however, the agency expects a slightly bigger record high of 13.73 million bpd, up from the prior forecast of 13.72 million bpd.

The EIA expects some producers in Opec+, which includes Opec and its allies, to limit their production after current voluntary output cuts expire at the end of June.

Three Opec+ sources said last week that the group is yet to begin formal talks on extending cuts, but it could extend them if demand fails to pick up. The group's next meeting is on June 1.