WSJ: OPEC Doubts if Oil Supply Will Keep Up With Growing Demand
By BENOÃŽT FAUCON
LONDON—OPEC said Wednesday that global oil demand growth will accelerate next year, rising by about 1 million barrels a day, and expressed doubts about whether expected increases in supply will keep pace.
The forecast from the oil exporters' group, its first for the year ahead, comes as crude prices have climbed sharply following the political crisis in Egypt, and data Tuesday showing an unexpectedly large reduction in U.S. oil stocks.
The August contract for U.S. light sweet crude on the New York Mercantile Exchange was up $1.12, or 1.1%, at $104.65 a barrel Wednesday morning, its highest level in 14 months.
The U.S. benchmark oil price has risen by almost $9 a barrel since the crisis in Egypt began at the start of last week, underscoring how oil prices in North America remain vulnerable to geopolitical risk, despite the ample new supply gushing out of shale rock formations.
On top of the heightened risk of disruption to oil shipments flowing through Egypt's Suez Canal, the Organization of the Petroleum Exporting Countries said its own oil production fell by about 310,000 barrels a day in June, the sharpest month-on-month drop in more than two years.
Violent protests slashed about 200,000 barrels a day of Libyan production, while output in Nigeria, where pipelines have been damaged by oil thieves, fell by 70,000 barrels a day, OPEC said.
"Political instability is continuing to be the prime source of uncertainty on the [African] continent during 2013 and 2014," the group said.
OPEC said it expects world oil demand to rise by 1.04 million barrels a day next year, an increase of around 300,000 barrels compared with the growth expected for the current year.
This demand boost should be matched by a 1.1 million barrel-a-day increase in supply from oil producers outside OPEC, most importantly U.S. shale oil, the report said.
However, it said that the supply growth from rival producers next year is subject to a "high level of risk" largely due to political unrest in Africa and the Middle East, and doubts about whether growth in U.S. shale oil output can maintain its current pace.
OPEC, whose members produce more than one in three barrels consumed in the world each day, doesn't expect to benefit from rising oil demand. It sees demand for its crude next year declining by about 300,000 barrels a day, to average 29.6 million barrels a day.
