(Adds EIA comments OPEC output, paragraph 3, U.S. and world economic growth, paragraphs 13-15)
By Tom Doggett and Ayesha Rascoe
WASHINGTON, March 10 (Reuters) - With the global economy getting stuck deeper in the mud, the U.S. Energy Department's forecasting arm on Tuesday again cut its estimate for global oil demand this year.
The Energy Information Administration said it expected world oil consumption to average 84.27 million barrels per day in 2009, down 430,000 bpd from its previous monthly forecast and the lowest level since 2005.
At the same time, world oil production is forecast to average 83.53 million bpd, down by a much bigger 900,000 bpd from the EIA's prior estimate, and the smallest volume since 2004. Most of that supply reduction reflects less OPEC output.
The drop in oil demand comes as U.S. job losses are now at the highest level in 25 years and the World Bank predicts the global economy will decline this year for the first time since World War II.
"The country today is in incredible stress," said U.S. Energy Secretary Steven Chu, adding that one out of every 12 American workers is out of a job. "This is a very scary statistic," he said.
The EIA has lowered its estimate for 2009 global oil demand in 11 out of its last 14 monthly forecasts. World oil consumption for this year is now 3 million bpd lower than the agency had forecast last September.
"The global economic contraction continues to depress energy demand," the EIA said.
The agency's forecast is the first of three widely watched reports on world petroleum use to be released this week.
Diesel fuel is expected to be the driver in lower overall global petroleum demand this year, compared to shrinking gasoline demand in 2008 due to high prices at the pumps.
"Globally, diesel is a more popular commodity as far as transportation (fuel) is concerned. So that is where I think you're going to see the decline," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. "We see reflection of that as distillate stocks in the U.S. keep piling up."
Diesel demand will also be lower because fewer raw materials and finished goods are being transported by truck in the weak economy.
"In the absence of a quick and sharp economic recovery -- which seems highly unlikely at present -- I think gasoline demand will continue to fare better than distillates demand in the months ahead," said Costanza Jacazio, an analyst with Barclays Capital.
The U.S. economy is expected to decline by 2.8 percent this year, "leading to a reduction in domestic energy consumption for all major fuels," the EIA said. The U.S. economy is then expected to rebound in 2010 with 1.9 percent growth.
The world economy will also take a deep hit this year, declining 0.8 percent, compared to the agency's prior forecast of a 0.1 percent decline.
During 2010, the global economy is expected to grow 2.6 percent, down from the EIA's previous estimate of 3 percent growth.
Along with the EIA, the International Energy Agency and OPEC will release oil demand forecasts this week.
The three forecasts come just before OPEC ministers meet in Vienna on March 15 to decide whether to further reduce their oil production levels on top of the 4.2 million bpd in output they have already agreed to cut.
