OPEC, supplier of 40 percent of the world’s oil, cut forecasts for the amount of crude it will need to supply for most of the next two decades as the shale-energy boom in the U.S. lessens dependency on the group.
Demand for crude from the Organization of Petroleum Exporting Countries may fall to a 14-year low of 28.2 million barrels a day in 2017, according to the group’s annual World Oil Outlook. That’s a cut of 600,000 a day from last year’s report and 800,000 below the amount required this year. OPEC lowered every published forecast for its crude through 2035 except next year, which will be higher than previously predicted.
The group’s members face mounting competition in the U.S., where technological breakthroughs -- hydraulic fracturing and horizontal drilling -- have caused a surge in domestic production. Oil prices slumped into a bear market last month amid speculation OPEC won’t do enough to tackle a glut when it meets on Nov. 27 to discuss output.
“The revision process for medium-term expectations of non- OPEC liquids has been the most dramatic for North American tight crude,” OPEC’s Vienna-based research department said in the report. “The amount of OPEC crude required in the Reference Case will fall” it said, refering to its expected scenario.
The biggest reduction in OPEC’s long-term forecasts for its crude from last year’s report was for 2030. Buyers will need 33 million barrels a day that year, down from the 34.8 million that it estimated a year ago.
OPEC raised its forecast for combined supplies from the U.S. and Canada for each year in its “medium-term” outlook from 2013 to 2018. It boosted the 2018 estimate by 2.2 million barrels a day to 19.1 million, and introduced a 2019 prediction of 19.4 million barrels a day.
The two countries’ supplies from “tight crude” will reach 4.4 million barrels a day in 2019, from 3.4 million this year, according to the report, which defines tight crude as “crude oil produced from low-permeability formations after having been hydraulically fractured.”
Shale drillers will be hurt by the recent fall in prices before members of OPEC because their costs are higher, with about 50 percent of shale supply likely to be curbed unless oil recovers, OPEC Secretary-General Abdalla El-Badri said in London on Oct. 29. Oil’s slump doesn’t present the organization with a “critical situation,” he said.
The organization increased estimates for global oil demand in 2015, by 700,000 barrels a day to 92.3 million a day, predicting that consumers outside the most advanced nations will use more oil than highly developed economies next year for the first time.