OPEC Sees Balanced Oil Market in 2014 as Losses Prevent SurplusGrant Smith
The global oil market will remain “fairly balanced” in 2014 as supply disruptions including delays at the Kashagan field in Kazakhstan prevent the build-up of a surplus, according to OPEC.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of the world’s oil supply, estimates it will need to provide an average of 29.8 million barrels a day this year, about 100,000 a day more than the group projected last month. OPEC raised the estimate because of lower output from natural gas liquids, the group’s Vienna-based research department said in its monthly market report today.
Growth in non-OPEC production will be capped at 1.38 million barrels a day this year amid declining output in the North Sea and a gas leak at Kashagan, it said.
“Unexpected outages such as at the Kashaghan field, which has pushed back production to 2016, are likely to limit further growth in non-OPEC supply,” the group said. “Along with the ongoing increase in non-OPEC supply, current OPEC production will contribute to fully meet expected demand, resulting in a fairly balanced market this year.”
Brent crude futures have been little changed this year, trading near $109 a barrel in London today, as prolonged disruption to Libyan supplies and concerns that the Ukraine crisis may crimp Russian oil exports is countered by signs of slowing economic growth in emerging economies such as China. Production from Kazakhstan’s $48 billion Kashagan development, the world’s largest discovery in 40 years, has been halted by a gas leak.
Output from OPEC’s 12 members increased by 130,800 barrels a day in April to 29.59 million a day, driven by a recovery in Iraqi supplies, OPEC said, citing secondary sources. Iraq’s production climbed by 102,100 barrels a day to 3.3 million. Saudi Arabia, the group’s biggest member and de facto leader, boosted supplies by 22,500 barrels a day in April to 9.58 million.
Supplies from Libya, which has been paralyzed by strikes at export terminals and political demonstrations at oilfields, remained little changed last month at 238,000 barrels a day.
Total output is about 400,000 barrels a day below the group’s formal target of 30 million. The organization will meet to review this figure at its next meeting in Vienna on June 11. OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
The call-on-OPEC is estimated at 30.7 million barrels a day in the third quarter, when summer demand for driving fuels is at its highest, requiring the group to raise output by about 1.1 million barrels a day from current levels, the report indicated.
OPEC kept its forecast for global oil demand in 2014 unchanged. World consumption will advance by 1.1 million barrels a day, or 1.3 percent, to average 91.15 million a day, according to the report.
The International Energy Agency, the Paris-based adviser to oil-consuming nations, will release its monthly report with forecasts of supply and demand on May 15.