Home' Trinidad and Tobago Guardian : October 15th 2015 Contents BG8 ENERGY
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 15 • 2015
The world s demand for oil is expected
to slow in 2016 in response to a more
pessimistic outlook for the global
economy, likely keeping the crude
market oversupplied, the International
Energy Agency (IEA) said Tuesday.
"Global demand growth is expected to slow from
its five-year high of 1.8 million barrels per day in
2015, to 1.2 mb/d in 2016," moving closer toward its
long-term trend, the IEA said in its monthly oil
That will probably mean a continued oil supply
glut next year, especially with the expected arrival
of Iranian crude.
"A projected marked slowdown in demand growth
next year and the anticipated arrival of additional
Iranian barrels --- should international sanctions be
eased --- are likely to keep the market oversupplied
through 2016," it said.
Citing the International Monetary Fund s recent
downward revisions on global growth estimates by
one-fifth of a percentage point, "projections for com-
modities demand logically require some trimming,"
the report said
Global consumption is expected to average 95.7
million barrels a day next year, down 100,000 from
estimates in last month s report.
One surprise is the resilient oil demand in China
despite its economic slowdown.
"Our preliminary August estimate posted a near
double-digit percentage point gain in year-on-year
terms despite the otherwise ailing macroeconomic
backdrop," the Paris-based agency said.
Crude oil prices were relatively stable in September
and rallied early this month on "expectations of a
lower US output and rising tension in the Middle
East," the IEA said.
But they dipped Tuesday following the IEA s latest
forecasts,Brent North Sea crude for delivery in Novem-
ber shedding 13 cents to stand at US$49.73 per barrel
in afternoon London deals.
US benchmark West Texas Intermediate for delivery
in November slid 26 cents to US$46.84 per barrel
compared with Monday s close.
Rebalancing market, when?
The IEA, which analyses energy markets for
advanced oil-consuming nations, noted that oil prices
at US$50 per barrel was "a powerful driver in rebal-
ancing the global oil market, but the big question is
just when will equilibrium be restored."
Russia s military intervention in Syria has raised
international political tensions and created uncertainty
---although for now the global oil supply glut is tem-
pering market reaction.
"Some of this uncertainly may start to clear next
year although, considering Iran, the market may be
off balance for a while longer," the report said.
Crude output by the 12-nation OPEC cartel rose
by 90,000 barrels a day to 31.72 million in September
driven by Iraq, now the world s biggest source of
Iraq s banner month to a record 4.3 million barrels
per day was due to a recovery in northern exports
from disruptions along the country s pipeline to
"But severe budgetary strain and ongoing issues
with security and infrastructure are likely to limit
supply growth in the near-term for Iraq," the IEA
As for non-OPEC producers, supply growth is
eroding with the sharpest slowdown in the United
States. In September non-OPEC oil production is
estimated to have dropped by 180,000 barrels per
day to 58.3 million.
In 2016 lower oil prices and steep spending cuts
are expected to reduce non-OPEC output by nearly
500,000 barrels per day, the report added.
Concerns about the
climate change impact
of burning the world s
resources mean the
reserves will never be
fully exploited, BP
Spencer Dale said on
means the relative
price of oil will not
over time, Dale said at
an economists con-
ference in London on
reserves of oil, gas and
coal would emit more
than 2.8 trillion tonnes
much more than the
1 trillion threshold sci-
entists have set to
limit global warming
to 2 degrees.
carbon emissions and
climate change mean
that it is increasingly
unlikely that the
world s reserves of oil
will ever be exhaust-
ed," Dale said.
BP is among the
world s top oil pro-
ducing companies but
group of energy firms
that has called for the
creation of a global
carbon pricing mech-
anism that would limit
investments in cli-
advances will also
reduce the cost to
reach resources, Dale
OPEC forecast on Monday that demand for its oil in 2016
would be much higher than previously thought as its strategy
of letting prices fall hits US shale oil and other rival supplies,
reducing a global surplus.
In a monthly report, the Organisation of the Petroleum
Exporting Countries (OPEC) forecast the world would need
30.82 million barrels per day (bpd) from the group next year,
up 510,000 bpd from the previous prediction.
OPEC s forecast, if realised, would be a further indication
its strategy is working. The group last year refused to prop
up prices and instead raised output, seeking to recover market
share taken by higher-cost rival production. Oil is trading
just below US$53, half its price of June 2014.
Supply outside OPEC is expected to decline by 130,000
bpd in 2016, the report said, as output falls in the United
States, the former Soviet Union, Africa, the Middle East and
much of Europe. Last month, OPEC predicted growth of
"This should reduce the excess supply in the market and
lead to higher demand for OPEC crude," OPEC said in the
report, "resulting in more balanced oil market fundamen-
The higher call on OPEC comes despite weaker global
demand growth overall. OPEC trimmed its estimate of 2016
world oil demand growth by 40,000 bpd to 1.25 million bpd,
citing slower growth in China.
Other forecasters also expect less oil from non-OPEC. The
International Energy Agency, which advises industrialised
countries, sees an even bigger drop in their supply in 2016.
The next IEA report is due out on Tuesday.
Output in the United States---the biggest source of non-
OPEC supply growth in recent years---is being hit by reduced
drilling activity and tighter credit conditions have reduced
companies access to funds, OPEC said.
The report said OPEC members continue to boost supplies.
According to secondary sources cited by the report, OPEC
pumped 31.57 million bpd in September; up 110,000 bpd
from August and almost two million bpd more than its pre-
diction of the demand for its crude this year.
With the higher demand it expects for OPEC crude in 2016,
the report points to a 750,000 bpd supply surplus in the
market next year if the group kept pumping at September s
rate, down from 1.23 million bpd indicated in last month s
In the third quarter of 2016, demand for OPEC crude will
rise to an average of 31.50 million bpd, OPEC predicted, similar
to current output and leaving almost no surplus.
Saudi Arabia, the driving force behind s OPEC s refusal to
cut output, told OPEC it trimmed production to 10.23 million
bpd in September, a further decline from June s record rate.
Global oil demand growth
to slow in 2016: IEA
will never be
used up: BP
OPEC sees more demand for its crude in 2016 as cheap oil hits rivals
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