OPEC's Forecast | Russell T. Rudy Energy LLC
“World Oil” reports that OPEC has released its annual “World Oil Outlook” which includes their predictions for global demand, supply and prices. While the primary focus is from now until 2020, the report also includes projections out to 2040.
The most recent OPEC forecast calls for demand for its crude sliding through 2020 as supplies from outside the cartel continue to increase. Demand for OPEC oil is projected at 30.7 million barrels per day (MMbopd) at the end of this decade, a downward revision of 1.7 MMbopd from last year’s forecast, and less than current production. These revisions reflect the realization of increased supplies from rivals such as the U. S. and Russia. While OPEC feels it is curbing the expansion of its competitors, this defense of market share is coming at a huge financial cost.
Given the OPEC supply and demand scenario, the cartel sees crude at $80 per barrel in 2020, a significant reduction from last year’s forecast of $110. Given these production and price forecasts, the cartel’s revenues in 2020 would be $218 billion less than previously anticipated.
While OPEC sees demand for its crude sliding by 2020, it nevertheless predicts total global demand for oil to rise by 500,000 bopd to 97.4 MMbopd. This increase is based on the assumption that by that time, demand from developing countries will exceed that from the developed economies of the Organization for Economic Cooperation and Development.
Concurrently, the forecast sees non-OPEC production dropping by 1 MMbopd from its prediction last year. However, it still anticipates it will grow 2.8 MMbopd to 60.2 MMbopd by the end of the decade, with almost a third of this from U. S. shale.
The report foresees non-OPEC supply contracting from 2020-2040 to 59.7 MMbopd and demand for OPEC production concurrently rising to 40.7 MMbopd. This in turn would increase OPEC’s global market share to 37%.
Production at these levels would require a world-wide investment of $10 trillion dollars according to the forecast, with most of this investment required in non-OPEC exploration and production projects.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/12/23/opec-sees-demand-for-its-crude-falling-for-rest-of-decade .
