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Page added on December 23, 2015
Oil back at $95 — but only in 24 years’ time
Oil prices will take decades to recover and will still not reach the peak seen in recent years, according to the latest World Oil Outlook (WOO) from OPEC.
In the group’s latest outlook on supply, demand and prices to 2020 and 2040, OPEC predicted that a barrel of oil would cost (in real terms) around $70 by 2020 and $95 by 2040, a far cry from a high point of $114 a barrel last seen in June 2014 before prices began to plunge on oversupply. On Wednesday, a barrel of benchmark Brent crude cost $36.51, a shade above WTI at $36.47.
Price declines were exacerbated by the decision last year by OPEC, the 12-member producer group led by Saudi Arabia, not to cut production. Still, OPEC’s Secretary General Abdalla Salem El-Badri said OPEC had been a bastion of stability amid volatile times for the oil industry.
“The supply and demand balance in 2015 has been one of oversupply, with stock levels rising to well above the five-year average. Despite this market instability, OPEC has continued to be an efficient, reliable and economic supplier of oil,” El-Badri noted in the foreword of report.
While the oil price plunge has been largely down to an oversupply, demand for oil has been strong but just not strong enough. Looking at potential future demand in its outlook, OPEC predicted oil demand to rise to 97.4 million barrels per day (mb/d) by 2020, a slight rise of 500,000 barrels a day compared to last year’s outlook.
By 2040, OPEC predicted overall demand to be close to 110 million barrels a day – a decline of around 1 mb/d on last year’s forecast.
OPEC to mop up
OPEC’s decision not to cut production in order to support prices was widely seen as a way for the group to retain its market share in the face of rivals, such as shale oil producers in the U.S. and Canada. The strategy has worked with many non-OPEC members, who tend to have higher production costs, struggling to break even.
As a result, many rivals have cut rigs and cancelled drilling projects while OPEC has continued to pump at record levels, often exceeding a self-imposed ceiling of 30 million barrels a day. OPEC has long predicted that the supply of oil from producers outside of the OPEC group would contract next year, just as world oil demand rises, and reiterated that prediction in the WOO.
As non-OPEC supply faltered, OPEC would be there to meet demand, El- Badri said.
“From the supply perspective, in last year’s WOO, non-OPEC liquids were expected to rise to 61.2 mb/d by 2020, whereas this year the number has dropped by 1million barrels a day to 60.2 mb/d. All this means that by 2020 the requirement for OPEC crude is anticipated to be at 30.7 mb/d, an increase of 1.7 mb/d from last year,” El-Badri said.
OPEC to invest
As rivals cut back on rigs, drilling projects and investments, OPEC warned that it was important that the “necessary future investments are made” and said it would do so.
“If the right signals are not forthcoming, there is the possibility that the market could find that there is not enough new capacity and infrastructure in place to meet future rising demand levels, and this would obviously have a knock-on impact for prices,” El-Badri noted in his foreword to the report.
OPEC signaled it was ready to invest in the “development of new upstream, capacity,” which, El-Badri noted, underscored “OPEC’s commitment to security of supply for consumers, which needs to go hand-in-hand with security of demand for producers.”
The group yet again signaled that it is ready to mop up market share from its competitors – especially those cutting back on production – stating that the increase in the overall requirement for OPEC crude between 2015 and 2040 is almost 10 million barrels a day — whereas for non-OPEC liquids it is just over 3 mb/d.
The forecast for demand had declined, however. “Overall demand by 2040 is at close to 110mb/d, around 1mb/d less than in last year’s WOO. This is the result of further energy efficiency improvements, environmental policies, as well as slightly lower long-term economic growth estimates,” OPEC’s secretary general said.
28 Comments on "Oil back at $95 — but only in 24 years’ time"
Lawfish1964 on Wed, 23rd Dec 2015 9:21 am
Pure tripe. Predicting the price of crude over the coming week is impossible, not to mention two decades out.
penury on Wed, 23rd Dec 2015 9:24 am
It appears to be a forecast for the economies of the world. Paraphrase as “We do not see sustained growth in the world economies prior to 2040.”
dissident on Wed, 23rd Dec 2015 10:05 am
The problem with modern economies is that if they do not grow, then they collapse. So a 24 year recession is not plausible. It will turn into a depression in a few years.
So the oil price will either skyrocket in the next few years or collapse more along with the world economy. I think that a global depression is unlikely in the next 20 years since there is a lot of room for growth in the developing world. So expect oil prices to jump high.
rockman on Wed, 23rd Dec 2015 10:55 am
fish – So true. But one can go by “gut” as long as you don’t put too much faith in it. lol. Having survived the last 24 yearlong bust I know the feelings and dynamics fairly well. The world is much different today than in the 80’s. Which doesn’t mean I think it will be quicker, longer or maybe never before we see significantly higher oil prices. But what I feel safe in saying is that the next 24 years can’t r4ealy be based upon what we went through the last few decades.
Truth Has A Liberal Bias on Wed, 23rd Dec 2015 10:58 am
Once again some of the folks who didn’t see the low oil prices coming are now telling us how long the low oil prices will be here.
Idiots.
Plantagenet on Wed, 23rd Dec 2015 2:42 pm
Does OPEC really think they’ll be pumping oil full out in 24 years? With Ghawar and most of the legacy fields at or very near their peak?
They’ll be lucky in 24 years if they’re producing 25% of what they can pump out now.
makati1 on Wed, 23rd Dec 2015 7:07 pm
“Oil back at $95 — but only in 24 years’ time”
HAHAHA! The only way oil will be $95 is if hyperinflation kicks in and we go Weimer. OR … it is the prelude to the final crash.
I do not waste my time on any ‘predictions’ past tomorrow’s weather.
HARM on Wed, 23rd Dec 2015 7:23 pm
24 years? That dovetails nicely with my retirement plans, thank you very much. If the oil&gas prognosticators can somehow can forestall the invading hordes of post-depletion zombies until I’ve had a least a few years of fishing, I’d be much obliged.
However, I doubt that will come to pass.
GregT on Wed, 23rd Dec 2015 7:38 pm
Every once in a blue moon you throw in a sensible comment planter.
Cheers! 🙂
Anonymous on Wed, 23rd Dec 2015 10:11 pm
What a waste of time….
danny on Wed, 23rd Dec 2015 11:48 pm
we are all too small and do not have enough information of what is really going on. Hell Obama and Putin could be allies for all we know….many people here show their ignorance spouting off like they are experts just because they have a computer….we can make guesses but that is all they are….we know a storm is coming just not when and how bad it will be.
makati1 on Thu, 24th Dec 2015 12:34 am
danny, if you read enough different sources outside the US MSM, you can get a pretty accurate idea of what is real and what is bullshit. Even if you were a speed reader, you could not read 0.01% of the resources at your fingertips everyday. If you read enough, you get a ‘feel’ for what is happening and what is ahead, and if you are intelligent, you prepare for it, hoping it never happens, like the insurance you buy. “Too small” is an excuse, not a reason.
Try: http://www.onlinenewspapers.com/
Thousands of newspapers free and online and most are in English. I am in the Philippines and I can read my hometown newspaper (US) anytime I want to.
Apneaman on Thu, 24th Dec 2015 12:43 am
24 years from now? Most people will be dead in 24 years from now including the ones born this year. Apes are fucking hilarious.
makati1 on Thu, 24th Dec 2015 3:36 am
Ap, unfortunately, I think there is about an 80%+ chance that most, if not all, of us will be dead by then. Even those not yet born. I would be 95 so there is a very good chance I will not see it. But, if I do, it will have been a very exciting 24 years. LOL
twocats on Thu, 24th Dec 2015 7:33 am
Putin and obama could be fuck buddies but unless 1) all the data being produced by all these institutions including independent trackers of oil tankers are all in some massive conspiracy 2) theyve solved the riddle of fusion power and at any moment they desire they could roll out an infinite zero carbon grid. Unless either of those is true… what apman and mak said.
danny on Thu, 24th Dec 2015 8:58 am
I don’t know MAK it is like you are still looking through a small window to predict the future. I think now more than ever our governments have been doing a lot of secret underhanded things that we have no idea about. For example we think we live in a free market system but that is not so. I believe that the governments of the world are manipulating the stock market to go up when ever they feel like it needs to. Go back in history and look at all the predictions and you will find that they were all wrong!! Just think of the predictions people made before WW1! I think they were very wrong!!
danny on Thu, 24th Dec 2015 9:41 am
All the world governments are in collusion of manipulating markets that is a given otherwise we would already have a collapse! That is why Europe, Russia, China…U.S economies have not collapsed. You keep looking at FIAT as if it had meaning but it does not. You are trying to base your opinions on facts but that is the problems there are no facts to view any more just lies. It is like the Americans that think that if they vote for this person or that person that it is going to make a difference….fools!!
GregT on Thu, 24th Dec 2015 9:51 am
“I think now more than ever our governments have been doing a lot of secret underhanded things ”
Our governments are not in control here. They are being manipulated by the same forces that are manipulating the markets.
twocats on Thu, 24th Dec 2015 10:18 am
Absolutely greg. Its peak oil forcing the govts and central banks to make all these moves – they didnt just wake up one morning and decide to dismantle the entire global infrastructure for giggles or because they “turned evil”. They have one goal – preservation of their power and theyve made these moves to that end in the face of peak oil. I disagree with the whole global collusion conspiracy. Their general goals align but there are who knows how many faction playing the game of thrones at the moment.
GregT on Thu, 24th Dec 2015 10:29 am
“For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that is the charge, I stand guilty, and I am proud of it.”
David Rockefeller, from his book ‘Memoirs’, Chapter 27, page 406
danny on Thu, 24th Dec 2015 10:57 am
Yes Greg I believe when the new U.S president is elected they take them into a room and show them what will happen to them and their family if they don’t obey….
danny on Thu, 24th Dec 2015 11:00 am
If TPTB want oil to go to 90 a barrel then it will go to 90 a barrel. That is just how it is and will be for our lifetime maybe different for the next generation maybe not…the charts and oil figures mean nothing they are all manipulated and I don’t think you can really get a full picture….
BobInget on Thu, 24th Dec 2015 6:28 pm
“50,000 Yemeni forces are ready to attack positions in Saudi Arabia and liberate the biggest cities in Jizan and Asir regions within the framework of the first stage of strategic options,” a military source said on Wednesday.
His remarks came after the Yemeni army and popular forces targeted a strategic military base in Saudi Arabia’s Asir province with another Qaher-I ballistic missile on Wednesday.
The missile precisely hit its target in Al-Faisal military base in Khamis Mushait region of Asir province.
Qaher-I is an updated version of a Russian-made surface-to-surface missile.
The ballistic missiles that have recently come into service in Yemen’s army have claimed a heavy toll from the Saudi side of the war. Only in the last one week, around 550 Saudi-led troops have been killed by these ballistic missiles
On Tuesday, the Saudi-led Coalition Forces suffered another devastating blow when two Qaher-I ballistic missiles hit their military bases in the province of Ma’rib and the border region of Tawwal, and killed over 200 troops, including Saudi, UAE, British and US officers.
“A Qaher-I ballistic missile of Yemen struck al-Safer military base in Ma’rib province, killing over 137 Saudi-led aggressors, including a large number of Saudi and Sudanese troops, five UAE officers, head of the operations room (in Safer military base) and foreign military experts who seemed to be American and British,” a Yemeni source told FNA.
The source noted that bodies of the Saudi-led troops killed in Al-Safer region were completely burnt.
He added that another Yemeni missile targeted Saudi Arabia’s Tawwal military base in the border region in Jizan province, killing at least 70 Saudi-led troops and injuring over 100 others.
The ballistic missiles that have recently come into service in Yemen’s army have claimed a heavy toll on the Saudi side of the war. Only in the last one week, around 550 Saudi-led troops have been killed by these ballistic missiles.
Apneaman on Thu, 24th Dec 2015 6:46 pm
“Saudi-led troops”
That’s code for mercenaries.
I don’t know anything regarding this source. I’m just sharing because it’s christmas and I’m full of it…..I mean spirit.
Yemeni Forces Kill More Blackwater Mercenaries
http://blogfactory.co.uk/archives/21248
Merry christmas Bob.
makati1 on Thu, 24th Dec 2015 8:12 pm
Danny, the contestants for the position of puppet-in-cheif of the Us is vetted/chosen by those in charge long before you even know they are running. At least the two who have a chance at winning. Trump may be a wild card as he is already wealthy and has some power of his own. May even be part of the in crowd. We shall see.
As for a world wide conspiracy, the Rothschild family started the plan long ago and I believe it is still operating toward the same goal, world domination by one government run by the elite for their benefit. The Rothschilds are the wealthiest family on the planet and likely worth more than one trillion USD. They are wealthy enough and powerful enough to keep out of the public eye and off of the “world’s Wealthiest” lists. THAT take power and connections everywhere. Just because you cannot see it doesn’t mean it is not there.
makati1 on Thu, 24th Dec 2015 8:17 pm
Bobinget, the sides are forming up. The ME is arming at an alarming rate. Has the 3rd world war begun? How far will it spread? How fast? When will it hit Europe? The US? Nowhere is safe in the time of 15,000 mph missiles that can carry 10 nukes each. Is it “Buckle Up” or “Duck and Cover? Or both?
BTW: Happy Holidays!
shortonoil on Fri, 25th Dec 2015 3:02 pm
“While the oil price plunge has been largely down to an oversupply, demand for oil has been strong but just not strong enough.”
A 3% increase in demand, driven by a 65% decline in price must be the weakest response to a price decline since Eve started distributing apples. The author calls it strong. They must be using the newest PC term for for the word. But, these commentators on oil prices certainly are entertaining; at the present rate of decline to get a 4% increase in demand (which might be enough to bring the price prices back to our curve) prices would have to decline to $15.63/ barrel. That happens to be well below the lifting costs of almost any producer today.
Even after spinning a yarn that would insult the intelligence of a dim witted mule, the authors go on to display their own credulity:
“OPEC signaled it was ready to invest in the “development of new upstream, capacity,” which, El-Badri noted,”
Saudi Arabia, one of the richest members of OPEC, is borrowing money to pay its bills. Competing against Russia, that has a 6% advantage by using rubles instead of dollars, the Saudis have a rough road ahead if their intent is to secure market share. Developing a new upstream capacity indicates that there is something to develop. Saudi Arabia has not discovered a new field worth mentioning in 60 years. Most of the rest of OPEC has not found much either in the area of new oil. What is meant by developing new upstream capacity is an in-field drilling program in their old depleted out fields.
The real story does not read as well as does the media spun fiction. It is much too short to publish, and it goes: “due to the effects of depletion every producer in the world is struggling to stay alive in the new price environment.” There is not much entertainment value in that! Guess CNBC is not going to be publishing our report on the situation anytime soon?
http://www.thehillsgroup.org/
makati1 on Fri, 25th Dec 2015 7:35 pm
Short, the Western MSM cannot let even one shred of reality escape into the delusional capitalist world. It would bring even more uncontrollable chaos into their problems and end their dream of controlling the world.
At least that is how I see it, even if I do not articulate it very well.