OPEC cuts 2015 demand forecast for its oil to lowest in a decade
Global demand for OPEC crude in 2015 is expected to fall to the lowest level in more than a decade and far below current output, the group said on Wednesday, pointing to a hefty supply surplus without OPEC output cuts or a slowdown in the U.S. shale boom.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group's oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation and over 1 million bpd less than it is currently producing.
The report follows OPEC's decision last month not to try and prop up prices by cutting output. Top exporter Saudi Arabia urged fellow members to combat the growth in U.S. shale oil, which needs relatively high prices to be economic and has been eroding OPEC's market share.
OPEC's Nov. 27 decision to retain its output target of 30 million bpd sent prices plunging. Brent crude LCOc1 on Wednesday was trading below $66 a barrel, close to a five-year low and down more than 40 percent since June.
The report cut its forecast for growth in global demand in 2015 due to a weaker outlook for Europe and Asia, and predicted higher supply growth from shale and other non-OPEC sources, although it said this may be slowed if prices stay weak.
"Should the current fall in crude prices continue over a longer period, it will impact the non-OPEC supply forecast for 2015, especially anticipated growth in tight crude," OPEC's report said, using another term for shale oil.
For now though, OPEC's report indicates that, with OPEC pumping 30.05 million bpd in November according to secondary sources cited by the report, there will be a surplus of 1.13 million bpd in 2015, and 1.83 million bpd in the first half.
Next year's average demand for OPEC crude is expected to be the lowest since 28.15 million bpd in 2004, using the December reports published on OPEC's web site each year as a comparison.
According to the secondary-source figures, OPEC output fell by 390,000 bpd from October, largely because of unrest in Libya and smaller reductions in Saudi Arabia and Kuwait.
Saudi Arabia told OPEC it trimmed production by 80,000 bpd - a reduction that industry sources said earlier this month probably reflects lower domestic demand in power plants rather than a cut in exports. <OPEC/O>
OPEC expects non-OPEC supply to rise by 1.36 million bpd in 2015, led by the United States. The forecast was raised by 120,000 bpd from last month's report.
The producer group trimmed its forecast for global oil demand growth. It expects demand to rise by 1.12 million bpd next year, or 70,000 bpd less than previously thought.
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