Secretary General says market outlook for 2014 is good
OPEC's Secretary General says he is comfortable with the market outlook for 2014 and that a forecast drop in demand for OPEC oil is not large, indicating the group may not make big changes to output policy at a December meeting.
The Organization of the Petroleum Exporting Countries expects demand for its crude to fall to 29.61m barrels per day (bpd) in 2014, down 320,000 bpd from 2013, due to rising supply outside the producer group.
“It is not a huge drop in the call on OPEC," Abdullah al-Badri said in London on Tuesday.
Referring to the market outlook he said: "Other than Libyan outages I am very comfortable. I hope that Libya will solve the problem before 2014, but I am comfortable now and comfortable in 2014 too, yes."
OPEC, which pumps more than a third of the world's oil, meets on December 4 to decide whether to adjust its output target of 30m bpd. Badri himself would not be drawn on what OPEC ministers would decide.
Supply from OPEC is almost exactly in line with the target, falling to 30.07m bpd in September, according to a Reuters survey published on Monday.
Output is at the lowest in almost two years due to protests and strikes in Libya, and work at Iraq's main export terminal.
Badri was attending the Oil and Money conference, an annual gathering of senior industry executives. He told the conference that a rise in shale oil output will not trouble OPEC.
North American output of tight oil, also known as shale, plus natural gas liquids could reach almost 5m bpd by 2018, and then it would decline, he said.
"I do not think that with this quantity OPEC is in trouble," Badri told the conference.
Meanwhile, OPEC is expected to update its public forecasts on shale’s potential – it commissioned a study in May - when it issues its annual World Oil Outlook in early November.
Already, the US shale boom has altered the landscape of oil trade. OPEC members Nigeria and Algeria have seen demand for their crude fall in the US, the world's top consumer, because of growing domestic supply.
But this need not alarm core OPEC members such as Saudi Arabia in the longer run, according to a senior International Energy Agency (IEA) official also at the conference.
“In the next few years we will continue to see growth in US shale oil, which is very good news for the US and the rest of the world,” IEA chief economist Fatih Birol said.
"But I don't think that this has either the resource base or the economics to replace Middle East oil," he added. The IEA advises industrialised countries on energy policy.
Tight oil output would be in decline by 2018 and the cost of such developments means that a sharp drop in oil prices would restrain supplies, Badri told the conference.
"This tight oil is hanging on the cost. If the (price) were to drop to $60 to $70, then it would be out of the market completely."
Current prices, of $108 a barrel for Brent crude, are at an acceptable level for producers and consumers, he said.