Global demand for oil from OPEC next year will be far below its current output level because of the U.S. shale boom, the group said on Wednesday, as its top producer, Saudi Arabia, kept silent on whether it will cut output to remove surplus oil from the market.
A lack of public comment from Saudi Arabia on the fall in oil prices to their lowest since 2010 has prompted industry watchers to wonder whether the kingdom may be moving away from a policy of simply managing the market and instead pursuing geopolitical goals.
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Saudi Oil Minister Ali al-Naimi broke months of silence on Wednesday to reaffirm the kingdom's policy of seeking stable global markets, but offered no insight on his response to tumbling crude prices.
Saudi Arabia's posture until now had triggered a number of theories: Riyadh may be hoping to curtail U.S. oil production, which needs high prices to keep booming, or it may wish to hurt Iran and Russia, which need higher prices to balance their budgets, for backing Syrian leader Bashar al-Assad.
Oil in October fell below $83 a barrel and on Tuesday reached $80.46, its lowest since 2010.
In a monthly report on Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) forecast that 2015 demand for its oil will drop to 29.20 million barrels per day (bpd), or almost 1 million bpd less than it is currently producing.
This is the last report before OPEC meets in Vienna on Nov. 27 to discuss whether to respond to the drop in prices by cutting output for the first time since the financial crisis in 2008.
The supply surplus looks even larger in the first six months of 2015, as the report estimates the world will require only 28.45 million bpd of crude on average from OPEC.
"In the first half, the demand will be much less than 29.2 million and so we'll have a massive oversupply if OPEC keeps the same output," said Carsten Fritsch, analyst at Commerzbank.
"That probably explains the steep decline in prices in previous weeks."
The report by economists at OPEC's Vienna headquarters said Saudi Arabia had told OPEC it produced 9.69 million bpd in October, little changed from 9.704 million in September.
OPEC also kept its main oil demand and supply forecasts unchanged. The group expects growth in world demand to accelerate to 1.19 million bpd in 2015 from 1.05 million bpd in 2014 and is fairly upbeat about the outlook.
"With economic indicators pointing to a continued recovery in the global economy, any additional improvement in the economies of major oil consuming countries should help the demand trend to pick up further," OPEC said.
However, the demand for OPEC crude is still expected to fall in 2015 by 245,000 bpd, unchanged from last month, as higher supply outside the group, particularly in the United States, squeezes the group's market share.
With OPEC pumping 30.25 million bpd in October, according to secondary sources cited by the report, there will be a surplus of close to 1 million bpd in 2015, and 1.8 million bpd in the first half, if OPEC keeps output unchanged.
According to the secondary-source figures, OPEC output fell by 226,000 bpd from September and Saudi output edged down by 70,000 bpd, largely in line with the 50,000 bpd Saudi reduction found by an Oct. 31 Reuters survey.
OPEC members including Kuwait have said a cut in output at the Vienna meeting is unlikely, but privately delegates are starting to talk of the need for some action, although they warn an agreement will not be easy to reach. (Reporting by Alex Lawler; editing by Giles Elgood)