Oil Supply and Demand Outlook to 2035

Only available on StudyMode
  • Download(s) : 126
  • Published : May 15, 2013
Open Document
Text Preview
Section One

Oil supply and demand outlook to 2035

Chapter 1

World oil trends: overview of the Reference Case
Section One of this Outlook, prepared using OPEC’s World Energy Model (OWEM), develops projections for medium- and long-term energy supply and demand to 2035. It is complemented by downstream analysis, based on the World Oil Refining Logistics and Demand (WORLD) model, in Section Two. The changing dynamics of the global energy scene are continually monitored and assessed at the OPEC Secretariat, and feed into this annual publication. Developments in the global economy and policy announcements are considered, as are key drivers and potential technological patterns that may emerge. It will be seen that major uncertainties lie ahead. Country groupings have been redefined in this year’s World Oil Outlook (WOO) compared to 2011. India is now analyzed as a separate country (previously it was part of a region termed ‘South Asia’, which included, inter alia, Bangladesh, Pakistan and Sri Lanka); a new region, ‘Other Asia’, includes other countries previously in South Asia, as well as what was previously termed ‘Southeast Asia’; different OECD regions now incorporate the new members that have joined that organization in recent years, accordingly, OECD regions have been renamed ‘OECD America’, ‘OECD Europe’ and ‘OECD Asia Oceania’; and the expression ‘Transition Economies’ has been replaced with the term ‘Eurasia’. After presenting an overview of the Reference Case in this Chapter, the following Chapter looks at sectoral demand prospects, while Chapter 3 considers the supply outlook in detail. Chapter 4 concentrates on various upstream challenges, particularly, the uncertainties that pervade the Outlook under a number of scenarios. These uncertainties relate to future oil supply and demand but also to oil prices. It will be seen that they lead to a genuine concern over security of demand, which is far more tangible than security of supply.

Main assumptions Oil price
For the WOO 2011, published in November 2011, the assumption for the OPEC Reference Basket (ORB)1 price, in nominal terms, was to remain in the range

25

Chapter 1

$85–95/b to 2020, rising thereafter to $133/b by 2035. This assumption was consistent with a real price of $80/b in 2010 prices. This represented an upward revision of around $10/b compared to the previous year’s report, and was made in the midst of considerable turbulence in prices: between late November 2010 and the end of April 2011, the ORB rose from $81/b to almost $120/b before declining to $103/b by the beginning of August 2011 (Figure 1.1). The reasons for the oil market being in a constant state of flux in 2011 were manifold: the ups and downs of the global economic recovery, Japan’s multiple disasters, and unrest in parts of North Africa and the Middle East. But speculation remained a major driving force in the price rise, with increasing investor interest in the crude oil paper market. Speculative activities persist as an issue in the current market. This can be seen in the respective size of the paper and physical markets. Since 2005, there has been a sharp increase in the number of open interest futures and options contracts. At times, it has surpassed three million contracts per day, which is equivalent to 3 billion b/d. This 201135 times the size of actual world oil demand. Box 1.1, is 2012 which explores this subject in detail, shows how current moves to tighten regulation in the paper markets clearly reflect the concern over the impact that speculation can have on market stability. October

Figure 1.1 NEW

Figure 1.1 OPEC Reference Basket price before and after WOO 2011 $/b

130
Pre-WOO 2011

Post-WOO 2011

120 110 100 90 80 70 60
WOO 2011 nominal range to 2020: $85–95/b

ly

y

y

be r

ril

ril

ly

Ju

Ap

nu

nu

Ap

Ju

to

Oc

2011

2012

26

Oc

Ja

Ja

to

be

ar

ar

r

October

Box 1.1...
tracking img