Home' Trinidad and Tobago Guardian : September 17th 2015 Contents SEPTEMBER 17 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG11
OPEC scales back 2016
oil forecast as emerging
The OPEC oil cartel on Monday trimmed
its forecast for global oil demand next year as
emerging markets, which have been the motor
of world growth in recent years, splutter.
Cheap oil prices should be enough to keep
oil demand growing slightly in volume terms
next year, but also nearly halt the expansion
of non-OPEC resources, the group said in its
Better than expected growth in the United
States and the eurozone prompted the Organ-
isation of the Petroleum Exporting Countries
to nudge up its forecast for world oil demand
growth this year to 1.46 million barrels per
day (bpd) to 92.79 million bpd.
Oil demand was stronger than it had forecast
in the main consuming countries "mainly
driven by lower oil prices".
However OPEC cut its 2016 forecast to a
1.29 million bpd gain to 94.08 million bpd
"due to the projected slower economic
momentum in Latin America and China."
The slowdown in China, which has damp-
ened the prospects for commodities producers
and sparked volatility in markets in recent
weeks, led OPEC to trim its forecast for global
economic growth to 3.1 per cent this year
and 3.4 per cent in 2016.
"While the group of emerging and devel-
oping economies has been the main growth
engine in recent years, it has become clear
that growth in this group is slowing down,"
Low oil prices were also beginning to have
an impact on production, it said.
The global oil market has been driven for
the past year and half by an increasingly trans-
parent policy by OPEC kingpin Saudi Arabia
to safeguard its market influence against upstart
shale producers who could change global
dynamics by cutting US dependence on
The refusal of Saudi Arabia and its OPEC
partners to cut production has seen crude oil
prices slump from more than US$100 per
barrel in 2013 to less than US$40 last month,
putting the squeeze on high-cost US produc-
"US oil production has shown signs of slow-
ing," said OPEC.
"This could contribute to a reduction in the
imbalance of oil market fundamentals, however,
it remains to be seen to what extent this can
be achieved in the months to come," it said.
However OPEC still sees a marginal increase
of US oil production to 13.97 mbpd next year
from 13.75 mbpd, with output from shale pro-
ducers also to nudge up if prices hold at current
That contrasts with a forecast made last
week by the International Energy Agency,
which analyses energy markets for oil con-
suming nations, that non-OPEC oil output
may drop by half a million barrels per day
next year---the biggest decline in 24 years---
with US shale producers accounting for four-
fifths of that drop.
...'All eyes' on
US oil production
The global crude oil market is keeping an
eye on how quickly US oil production falls
during an era of lower prices, OPEC said in
its latest market report.
The Organisation of Petroleum Exporting
Countries said it expected production from
non-member states to grow by about 160,000
barrels per day next year, a downward revision
of about 110,000 bpd from the previous report.
The global market is skewed toward the
supply side as weak European and Asian eco-
nomic growth is keeping demand suppressed.
Crude oil prices are down more than 50 per
cent from last year, leaving energy companies
with less cash to invest in exploration and
"In North America, there are signs that US
production has started to respond to reduced
investment and activity," OPEC said in its
monthly market report. "Indeed, all eyes are
on how quickly US production falls."
A report last week from the US Energy
Information Administration said seasonal fac-
tors offshore and weak economics onshore are
expected to lead to a decline in US crude oil
production. In a short-term market report,
EIA said total crude oil production will decline
4.3 per cent from expected full-year 2015 levels
to 8.8 million barrels per day by 2016.
EIA forecasts were revised down by 100,000
bpd from August.
OPEC in its market report said world oil
demand growth is expected to be around 1.46
million bpd for 2015, an upward revision of
about 84,000 bpd. Lower oil prices are the
main driver of demand and modest economic
"At the same time, US oil production has
shown signs of slowing," OPEC said. "This
could contribute to a reduction in the imbalance
of oil market fundamentals, however, it remains
to be seen to what extent this can be achieved
in the months to come."
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