Opec sees shale boom in US eroding demand for its crude

Bloomberg/London

The Organisation of Petroleum Exporting Countries forecast the world will need less of its crude next year, even as global oil demand growth rebounds to its strongest pace since 2010, amid competing supply sources.

Demand for Opec’s crude will slip by 300,000 bpd next year to 29.6mn a day next year, or about 2.6% less than the 12-member group is pumping now, the organisation said in its first set of forecasts for 2014. The need for Opec’s crude will diminish even as global oil demand growth recovers to 1mn bpd in 2014, from 800,000 a day this year, amid rising output in the US and Canada.

“The strong growth trend seen in 2013 is expected to continue in 2014” for production from outside Opec, the organisation’s Vienna-based secretariat said in its monthly market report yesterday.

Dependence on Opec’s crude is slipping as the US and Canada unlock unconventional oil supplies from deep underground shale deposits with new drilling techniques. Brent crude futures have slipped 2.7% this year amid signs of slowing growth in China and uneven recovery in the US, the world’s biggest oil consumers.

World oil consumption will advance by 1mn bpd, or 1.2% to 90.7mn next year as emerging nations expand and developed economies continue to recover, the organisation said. Demand estimates for 2013 were kept mostly unchanged, with an anticipated growth rate of about 800,000 bpd, or 0.9%, to 89.6mn bpd.

China imports drop threatens global oil demand growth

China’s crude imports fell in the first half of 2013 compared with a year ago; raising the prospect that slowing growth in the world’s second-largest economy may lead to lower-than-expected global fuel consumption this year. With oil imports dropping and China warning of a “grim” trade outlook yesterday, the world’s second-biggest oil consumer may not be the buoyant force it has been in the past decade. “There is certainly a risk that oil demand growth will miss forecasts because of the slowdown in China,” said an analyst.