LONDON: Global demand for Opec crude in 2015 is expected to fall to the lowest level in more than a decade and far below current output, the group said yesterday, pointing to a hefty supply surplus without Opec output cuts or a slowdown in the US shale boom.
In a monthly report, the Organisation 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 try and prop up prices by cutting output. Top exporter Saudi Arabia urged fellow members to combat the growth in US shale oil, which needs relatively high prices to be economic and has been eroding Opec’s market share.
Opec’s November 27 decision to retain its output target of 30 million bpd sent prices plunging.
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.
For now though, Opec’s report indicates that, with Opec pumping 30.05 million bpd in November according to secondary sources cited by the report, there will be a surplus of 1.13 million bpd in 2015, and 1.83 million bpd in the first half. Next year’s average demand for Opec crude is expected to be the lowest since 28.15 million bpd in 2004, using the December reports published on Opec’s web site each year as a comparison.
According to the secondary-source figures, Opec output fell by 390,000 bpd from October, largely because of unrest in Libya and smaller reductions in Saudi Arabia and Kuwait.
Saudi Arabia told Opec it trimmed production by 80,000 bpd — a reduction that industry sources said earlier this month probably reflects lower domestic demand in power plants rather than a cut in exports. Opec expects non-Opec supply to rise by 1.36 million bpd in 2015, led by the United States. Reuters
LONDON: British energy giant BP announced a major restructuring of the company’s operations faced with sliding revenues from plunging oil prices. BP said it would take a restructuring charge totalling about $1bn over the next year “as part of its wider ongoing group-wide programme to simplify across its upstream and downstream activities and corporate functions”.
It added it would provide further details in upcoming earnings statements. Reports say BP could cut jobs as part of the restructuring plan. The company has been hit hard in recent months by plunging oil prices, which have collapsed by more than 40 percent since June to strike five-year low points this week.
It comes after BP — which was devastated by the catastrophic Gulf of Mexico oil spill in 2010 — has been forced to sell off billions of dollars of assets to meet the clean-up bill. AFP
