OPEC Cuts Forecast for 2015 Energy Demand

Global demand for OPEC crude in 2015 will be less than expected and far below its current output, the group said on Wednesday, pointing to a hefty supply surplus without OPEC output cuts or a slowdown in the U.S. shale boom.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation and over 1 million bpd less than it is currently producing.

The report follows OPEC’s decision last month not to prop up prices by cutting output. Top exporter Saudi Arabia urged fellow members to combat the growth in U.S. shale, which needs relatively high prices to be economic and has been eroding OPEC’s market share.

 
OPEC’s Nov. 27 decision to retain its output target of 30 million bpd sent prices plunging. Brent crude LCOc1 on Wednesday was trading below $66 a barrel, close to a five-year low and down more than 40 percent since June.

The report cut its forecast for growth in global demand in 2015 due to a weaker outlook for Europe and Asia, and predicted higher supply growth from shale and other non-OPEC sources, although it said this may be slowed if prices stay weak.

“Should the current fall in crude prices continue over a longer period, it will impact the non-OPEC supply forecast for 2015, especially anticipated growth in tight crude,” OPEC’s report said, using another term for shale oil.

via Reuters

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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