What OPEC Is Really Telling The IMF

Energy

Published: October 9, 2014 3:04 pm

Last Updated: October 9, 2014 3:07 pm

The Secretary General for the Organization of the Petroleum Exporting Countries (OPEC), H.E. Abdalla Salem El-Badri, issued a statement to the International Monetary Fund (IMF) on Thursday. He touched on a few key points of crude oil prices, the global economic forecast, and emerging markets, to name a few. What we would stress to our readers is what OPEC sees for global demand and output — that thing called the US Energy Boom hangs in the balance.

The underlying message from this statement is that as production in North America continues to grow it will outpace production in the rest of world, driving the demand of oil down over time. Crude oil prices in September fell to their lowest level this year. A further easing of supply worries and softening demand combined to place downward pressure on crude prices. Other views and predictions were given by the Secretary General…

The global economy is forecast to continue its gradual recovery. Global GDP growth in 2014 is forecast at 3.2%, based on 2011 Purchasing Power Parity, accelerating to 3.6% in 2015. After a soft start to the year, global growth recovered with a particularly strong rebound in the US, which is now forecast to grow by 2.1% in 2014.

In the developing and emerging economies, the slowing growth trend has continued into the current year. China, Brazil and Russia are all expected to grow at a lower rate in 2014 compared to last year. Particularly Russia and Brazil are expected to see limited growth this year at 0.3% and 0.6% respectively, before slightly improving in 2015 to 0.9% and 1.2%. China, which is coming from very high growth levels in the previous years, is forecast to grow by 7.4% in 2014 and 7.2% next year.

World oil demand in the first half of this year was lower than expected. In the Americas, efficiency improvements and industrial sectors have dampened oil demand growth. The lower-than-expected macroeconomic performance in Europe resulted in reduced oil consumption as well.

North America remains the main driver for the non-OPEC supply growth in 2014. Production in Brazil is also expected to increase, and oil output from the UK is projected to continue its decline.

Based on OPEC’s supply and demand projections, the increase in total nonOPEC supply will outpace the growth in world oil demand. This will result in the demand for OPEC crude in 2014 averaging around 30 mb/d.

And the price of crude oil… Brent Sea crude went to $90.05 on Thursday, what may be the lowest level in about two years; NYMEX crude closed down $1.54 at $85,77, its lowest level since late 2012.

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