Bloomberg News

OPEC Boosts 2015 Oil Demand Forecast Following ‘Swift’ Recovery

November 09, 2011

Nov. 8 (Bloomberg) -- The Organization of Petroleum Exporting Countries raised estimates for global oil demand to 2015 after a swifter-than-expected economic rebound.

Worldwide consumption will increase by 5.3 percent to 92.9 million barrels a day in the next four years, led by emerging Asian economies, OPEC said today in its annual World Oil Outlook. The 2015 estimate is 1.9 million barrels more than last year’s forecast. Still, Europe’s debt crisis and slowing U.S. growth pose risks, the group said.

“The recovery has in fact been swifter than expected,” OPEC’s Vienna-based secretariat said. “Risks appear skewed to the downside, especially since the sovereign debt crisis in some EU countries seems to be spreading and the world economy slowing down further.”

Brent crude futures in London, trading at $113TK a barrel today, are headed for a record annual average as demand continues to recover from the 2008 financial turmoil while Libyan exports remain reduced following the uprising. OPEC predicts it will need to invest $30 billion a year to 2015 to keep pace with the increase in oil demand. That growth may be curtailed if Europe’s swollen deficits hurt global economic growth, OPEC said.

The projected demand expansion means OPEC will have to produce more oil over the next four years than it had previously forecast. The group will need to boost supplies by 3.6 percent to 31.3 million barrels a day by 2015, according to OPEC.

Emerging Economies

Consumption growth will be led by emerging economies in Asia. Demand in China will increase by 21 percent to 11.6 million barrels a day, from 9.6 million this year, it said. Demand in the industrialized nations that compose the Organization for Economic Cooperation and Development will be little changed in the period, estimated at 46 million barrels a day in 2015.

Supplies from outside the organization, including non- conventional oil and natural gas liquids, will increase “steadily” to 2015, rising 4.5 percent to 55.3 million barrels a day as output from the Caspian Sea, Brazil and Canada compensates for the decline of conventional crude exports from the North Sea and Mexico, according to the report.

OPEC said it plans to double the level of “spare” production capacity set aside for supply crises, to 8 million barrels a day over the medium-term, from 4 million currently.

Crude Production

The report also includes OPEC’s assessment of supply and demand to 2035. Global oil consumption will climb to 109.7 million barrels a day by the end of the period, requiring OPEC crude production to reach 39.3 million barrels a day. That will leave the organization’s contribution to global supplies at 36 percent, little changed from current levels, it said.

The world will need to spend $3 trillion on finding and developing new supplies to 2035, OPEC said. The organization expects it will need to spend $30 billion a year to 2015, and then more than $40 billion a year in the next two decades.

OPEC raised its assumptions for oil prices amid higher investment costs and following gains in futures prices in the past year. Crude may trade at about $85 to $95 a barrel this decade, OPEC said, or about $10 a barrel more than it previously anticipated. Prices may advance to $133 a barrel by 2035, according to the report.

The International Energy Agency, an adviser to consuming nations, releases its own long-term assessment, the World Energy Outlook, tomorrow.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. It is next scheduled to meet on Dec. 14 in Vienna.

--Editors: Raj Rajendran, Rob Verdonck

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net


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