OPEC Sees Lower 2015 Demand
LONDON – Global demand for oil from OPEC next year will be far below its current output level because of the US shale boom, the group said on Wednesday, as its top producer, Saudi Arabia, kept silent on whether it will cut output to remove surplus oil from the market.
In a monthly report OPEC forecast that 2015 demand for its oil will drop to 29.20 million barrels per day (bpd) – almost 1 million bpd less than it is currently producing.
Saudi Oil Minister Ali Al-Naimi reaffirmed the Kingdom’s policy of seeking stable global markets, but offered no insight on his response to tumbling crude prices. Brent for December settlement declined 52 cents, or 0.6 percent, to $81.15 a barrel at 11:49 a.m. New York time on the London-based ICE Futures Europe exchange. The contract closed at $81.67 Tuesday, the lowest since October 2010. WTI for December delivery dropped 34 cents to $77.60 a barrel on the New York Mercantile Exchange. Volume was 4 percent above the 100-day average. The US benchmark crude was at a $3.57 discount to Brent on the ICE.
Global demand for OPEC crude will fall by 245,000 bpd to 29.20 million bpd in 2015, unchanged from last month. That suggests a surplus of close to 1 million bpd in 2015 if OPEC keeps output at October’s 30.25 million bpd, as assessed by secondary sources cited by the report.
Brent crude for delivery in December lost 20 cents to $81.47 a barrel around midday in London. The contract had on Tuesday hit $80.46 – the lowest level since September 2010. US benchmark West Texas Intermediate for December delivery lost 43 cents to $77.51 a barrel.
“Oil prices continue to tumble on concerns over modest demand and no signs of clipping supply at OPEC,” said Desmond Chua, market analyst at CMC Markets in Singapore.
The report said Saudi Arabia had told OPEC it produced 9.69 million bpd in October, little changed from 9.704 million in September.
OPEC also kept its main oil demand and supply forecasts unchanged. The group expects growth in world demand to accelerate to 1.19 million bpd in 2015 from 1.05 million bpd in 2014 and is fairly upbeat about the outlook.
“With economic indicators pointing to a continued recovery in the global economy, any additional improvement in the economies of major oil consuming countries should help the demand trend to pick up further,” OPEC said.
However, despite rising world demand, OPEC expects demand for its oil to fall in 2015 as higher supply outside the group, particularly in the United States due to its shale energy boom, squeezes its market share. — Agencies
(Source: Saudi Gazette)