The Organization of Petroleum Exporting Countries (OPEC) stated that demand for its crude will slide 300,000 barrels a day next year to 29.6 million barrels of oil per day (MMbopd), or about 2.6 percent less than the organization is currently producing, the agency said in its 2014 forecasts.
Even as global oil demand growth has returned to 2010 levels, OPEC forecasts that the world will need less of its crude in 2014.
“Expected higher growth in the US and a recovery in the Euro-zone are the main drivers behind the forecast,” stated OPEC. “Non-OECD [Organization for Economic Co-operation and Development) countries are projected to continue to lead oil demand growth with 1.2 million barrels a day, while OECD economies are expected to remain in decline mode, with a contraction of 0.2 MMbopd, or only half the rate expected for this year.”
As the United States and Canada continue to unlock large amounts of unconventional resources, dependence on OPEC’s crude is slipping, causing a 2.5 percent dip in Brent crude futures, this year.
“Oil demand is surging and commodities are on a tear … adding to a buying frenzy,” Phil Flynn, senior market analyst at the PRICE Futures Group, said in a July 11 analyst report. “Oil supply will outstrip acceleration in demand growth next year as production outside of OPEC expands at the fastest pace in 20 years.”
China’s oil use will also climb by 3.3 percent to 10.4 million barrels a day in 2014, predicted OPEC, which is a similar percentage gain to that predicted for this year. Supplies from outside OPEC nations are forecasted to increase by 1.1 million barrels a day next year to 55.1 million, compared with an increase of 1 million estimated for this year, the agency stated. This expansion will be generated by the U.S. and Canada, and helped by nations including Brazil, Kazakhstan and South Sudan.
“The assessment should ‘give bulls some cause for alarm’”, Flynn reported. “While demand growth is also forecast to pick up momentum, this will still fall short of forecasted non-OPEC supply growth.”
The International Energy Agency is slated to publish its first assessments for 2014 in a report Thursday.
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