OPEC Cuts Demand Forecast Affected by US Shale Rise

OPEC reduced forecasts for the amount of crude it will need to supply by the most in at least three years as surging North American shale output reduces reliance on the group’s supplies.

The Organization of Petroleum Exporting Countries expects it will need to pump an average of 29.2 million barrels a day of crude next year, 200,000 a day less than it forecast a month ago. The group boosted estimates for supplies from countries outside OPEC by the same amount. The change implies that OPEC’s 12 members would need to cut output by about 1.1 million barrels a day from the 30.3 million they produced in August.

Brent crude futures declined below $100 a barrel on Sept. 8 for the first time in 14 months amid constrained global consumption, swelling U.S. output and speculation that threats to supply in Iraq, Libya and Russia are fading. U.S. crude production will surge to a 45-year high next year, lowering prices and reducing the need for imports, the nation’s Energy Information Administration said yesterday.

“Supply concerns appear to be receding, as geopolitical tension in Ukraine and the Middle East have not led to major supply disruptions,” OPEC’s Vienna-based secretariat said in its monthly oil market report.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza