Global demand for OPEC's crude will be lower in 2020 than next year as supply from rivals proves more resilient than expected.
LONDON, Dec 23 (Reuters) - Global demand for OPEC's crude will be lower in 2020 than next year as supply from rivals proves more resilient than expected, potentially fuelling a debate on the merits of its strategy to let prices fall to hurt other producers.
The Organization of the Petroleum Exporting Countries, which a year ago refused to cut supply to retain market share against higher-cost rivals, in its 2015 World Oil Outlook raised its global supply forecasts for tight oil, which includes shale, despite a collapse in prices.
Demand for OPEC crude will reach 30.70 million barrels per day (bpd) in 2020, OPEC said, lower than 30.90 million bpd next year. The expected demand from OPEC in 2020 is about 1 million bpd less than it is currently producing.
Oil has more than halved its price in 18 months and sank to an 11-year low of $36.04 a barrel this week. The drop has helped to boost oil's medium-term use, although OPEC said the demand stimulus of low crude prices will fade over time.
"The impact of the recent oil price decline on demand is most visible in the short term," OPEC Secretary-General Abdullah al-Badri wrote in the foreword to the report. "It then drops away over the medium term."
OPEC is increasingly divided over the merits of the 2014 shift to a market-share strategy, which was led by Saudi Arabia and its Gulf allies, and at a Dec. 4 meeting failed to agree a production ceiling for the first time in decades.
Nonetheless, the report shows that the medium-term outlook - from OPEC's point of view as the supplier of a third of the world's oil - has improved. In the 2014 edition, demand for OPEC crude was expected to fall to 29.0 million bpd by 2020.
View Full Article
Copyright 2016 Thomson Reuters. Click for Restrictions.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you