OPEC sees demand for its crude falling again next yearBy Margaret McQuaile and Richard Swann in London July 10, 2013 -- OPEC expects demand for its crude to decline again in 2014 as rising oil supply from independent producers outpaces the predicted increase in global oil consumption. In its latest monthly oil market report released July 10, the oil cartel sees the call on its crude at 29.61 million b/d in 2014, which represents a year-on-year drop of around 250,000 b/d after an anticipated fall of 420,000 b/d this year. The forecast call on OPEC crude for next year is well below current production, which OPEC says averaged 30.379 million b/d in June, and is also below the group's official 30 million b/d production ceiling. OPEC said the declining call on its crude in 2014 "would imply a further build in global crude inventories, which currently stand at high levels."The June output figure, meanwhile, represents a 309,000 b/d drop from an upwardly revised 30.688 million b/d in May. Libya accounted for 207,000 b/d of the month-on-month decline. Other smaller dips came from Nigeria, Angola, Iraq, Venezuela and Algeria. Saudi Arabia increased output by 50,000 b/d to 9.575 million b/d, OPEC said, while UAE output rose by 20,000 b/d to 2.741 million b/d. Iranian output was estimated at 2.669 million b/d, unchanged from May. OPEC's June production of 30.38 million b/d is in line with the cartel's 30.39 million b/d forecast of demand for OPEC oil in the July-September quarter. For the fourth quarter, OPEC expects demand for its oil to average 30.55 million b/d. But on a whole-year basis, the group is facing lower demand next year, when the call on OPEC is forecast to fall to 29.61 million b/d from 29.86 million b/d in 2013. Between the fourth quarter of this year and the first quarter of 2014, OPEC expects demand for its crude to plunge by 1.27 million b/d to 29.28 million b/d. OPEC officially uses secondary sources to monitor its production but also publishes a table of output figures submitted directly by member countries. The latest table shows that Iran, whose oil exports have been more halved by US and European Union sanctions, continues to insist that it is producing more than 3.7 million b/d - a million barrels per day more than the secondary source estimate. Nigeria's direct submission of 1.716 million b/d, however, was 145,000 b/d below the secondary source estimate. Saudi Arabia's direct submission of 9.642 million b/d was also higher than the secondary source estimate. A Platts survey published July 9 estimated Saudi Arabia's June output at 9.65 million b/d and that of OPEC as a whole at 30.45 million b/d. The difference between the secondary source estimates and the figures directly submitted by member countries tends to be big. In May, the direct submissions totaled 32.221 million b/d, 1.53 million b/d more than the secondary source total. The direct submissions for June do not include a figure from Angola, but if Angola were to repeat the 1.73 million b/d figure it supplied for May, the June total would be around 32.12 million b/d - some 1.74 million b/d more than the secondary source total.
OPEC sees world oil demand rising to 90.68 million b/d in next year, up 1.04 million b/d from this year's average of 89.64 million b/d. The increase in demand, which outpaces predicted consumption growth of 770,000 b/d in 2013, stems partly from an improved economic outlook for next year, OPEC said. Global economic growth is forecast at 3.5% in 2014, up from 3% in 2013. "For oil products, diesel is seen contributing the largest growth share in 2014 on the back of higher demand in the transportation and industrial sectors," OPEC said. As in recent years, the expected growth in oil demand in 2014 is seen coming from developing economies outside the OECD. Chinese oil demand is expected to rose to 10.4 million b/d, up 340,000 b/d from this year, with other substantial increases expected from Latin America, the Middle East and other Asian countries. Against this, total oil demand in OECD countries is expected to decline to 45.38 million b/d, down 210,000 b/d from 45.6 million b/d in 2013. This marks a slowdown in the rate at which oil demand is falling in the OECD after an expected contraction of 380,000 b/d in 2013. On the supply side, non-OPEC production is expected to rise by 1.14 million b/d to reach 55.06 million b/d next year, following growth of 980,000 b/d in 2013. The majority of the supply growth stems from the continued rapid development of tight oil and oil sands deposits in the US and Canada, with North America as a whole accounting for 710,000 b/d of the increase. US oil production is expected to rise by 560,000 b/d next year to reach 11.33 million b/d. Smaller increments in non-OPEC production are expected to come from Latin America and the Former Soviet Union, OPEC said. Production of natural gas liquids from OPEC countries is expected to rise to 6.01 million b/d in 2014, up from 5.87 million b/d in 2013, making a further dent in the expected demand for OPEC crude. © 2013 Platts, The McGraw-Hill Companies Inc. All rights reserved. To subscribe or visit go to: http://www.platts.com |
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