OPEC Sees 2015 Supply Surplus Rising
The collapse in oil prices is starting to slow growth in US output, the Organization of the Petroleum Exporting Countries (OPEC) said on Thursday, although the slowdown will not prevent an increasing global surplus in 2015 and demand for the exporter group's oil falling to its lowest in a decade.
Reuters | Last Updated: January 15, 2015 23:54 (IST)
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London: The collapse in oil prices is starting to slow growth in US output, the Organization of the Petroleum Exporting Countries (OPEC) said on Thursday, although the slowdown will not prevent an increasing global surplus in 2015 and demand for the exporter group's oil falling to its lowest in a decade.
In a monthly report, OPEC forecast demand for the group's oil would drop to 28.78 million barrels per day (bpd) in 2015, down 140,000 bpd from its prior estimate and well over 1 million bpd less than it is currently producing.
Oil prices have fallen almost 60 per cent since June, partly because OPEC in November decided against cutting output to retain market share against rival suppliers. The rout has put forecasts for the boom in US output in the spotlight.
"The steep drop in global oil prices could endanger the marginal barrel's output from unconventional sources," OPEC said in the report, written by its economists at the group's Vienna headquarters.
"As drilling subsides due to high costs and a potentially sustained low oil price, production could be expected to follow, possibly late in 2015."
At OPEC's meeting, top exporter Saudi Arabia urged fellow members to combat the growth in supply from competing sources including US shale, which needs relatively high prices to be economic and has been eroding OPEC's market share.
In the report, OPEC forecast total US oil supply will average 13.81 million bpd in 2015, up 950,000 bpd from 2014. The growth rate is slower than the 1.05 million bpd expected last month, but the United States is still by far the largest contributor to non-OPEC supply expansion.
OPEC is not the only oil forecaster to see a slowdown in US supplies. The US government said on Tuesday it expects domestic oil output in 2016 to grow by only 2.2 per cent, the slowest pace in years.
Even so, this 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 website each year as a comparison.
The lower OPEC demand forecast for 2015, plus a rise in OPEC output in December led by Iraq, means the report projects a larger global supply surplus in 2015, without output cuts by OPEC or other producers.
With OPEC pumping 30.20 million bpd in December, according to secondary sources cited by the report, the report indicates there will be a supply surplus of 1.42 million bpd in 2015 and 2.41 million bpd in the first half - more than last month.
Copyright @ Thomson Reuters 2015
Story first published on: January 15, 2015 23:39 (IST)