Resource riches

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For 2013 as a whole, OPEC forecast world oil use would grow by 780,000 bpd, slightly lower than 790,000 bpd previously expected.

For 2013 as a whole, OPEC forecast world oil use would grow by 780,000 bpd, slightly lower than 790,000 bpd previously expected.

OPEC, enjoying oil at just over $100 a barrel, looks set to keep its output policy on a steady course for 2013 — leaving clear room for booming US shale supplies.

“Let me tell you this, this is the best environment for the market. Supplies are plentiful, demand is great, balanced — inventories are balanced,” influential Saudi Oil Minister Ali Al Naimi said last month.

And while the price of oil by historical standards is expensive, it is well below the $125 that rang alarms in major consumer countries last year.

“The current price is fair and reasonable,” UAE Oil Minister Suhail Bin Mohammed Al Mazroui told Reuters last month.

“It’s been sustained for some time without impacting the  economics of the producers and the countries that are buying the crude. It also encourages investment in future supply,” said Mazroui, attending his first meeting of OPEC.

Triple-digit oil has also encouraged development of US shale oil in North Dakota and Texas, some of which is the most costly in the world to produce and competes with OPEC crude of similar quality from Nigeria and Algeria, rather than heavier Saudi output.

 Innovative use of hydraulic fracturing, or “fracking,” has unlocked new resources of oil and gas trapped in shale rock, putting the United States in line to become the world’s largest oil producer by 2017, overtaking Saudi Arabia.

That is not worrisome for Riyadh, especially when it comes to charting policy for the second half of 2013.

“This will be a straightforward meeting leading to a rollover (of the existing output target),” a Gulf OPEC delegate told Reuters. “Shale isn’t an immediate threat or concern for Saudi Arabia.”

And the kingdom — holder of most spare capacity in the Organisation of the Petroleum Exporting Countries — shows no sign of opening the taps to bring down prices and curtail that output by making it uneconomic.

Some within OPEC are concerned about the potential for both slow global growth and a dramatic rise in US shale oil to send prices tumbling.

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Posted by: jonjon

this is old news, research reports that have been produced in regards of the American shale boom has found that it is not sustainable for the long run. that the Americans will be energy efficient for a few years but not as long as to stop relying for OPEC oil. the biggest threat to OPEC is Canada, with better and newer technology it has the possibility to have more reserves then ksa and Venezuela combined.

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