The Organization of Petroleum Exporting Countries (OPEC) doesn’t see possibilities for oil price decline. According to OPEC’s Secretary-General Abdalla El-Badri comments to media, the global crude market will be well supplied in 2013 and prices won’t collapse.
Currently the oil market is steady with no severe contrast between supply and demand. Throughout the year supply is expected to remain on sufficient levels to satisfy the growing demand. If some kind of issue would appear it won’t be the inability to meet the increasing demand.
OPEC expressed concerns that the geopolitical instability in the Middle Estern region is over-speculated with exaggerated treats. Therefore the organization sees no causes that could eventually lead to a oil price collapse in 2013.
In 2012 the price of Brent crude ranged 3.5% around $111.11 per barrel. In the first month of 2013 Brent prices were steady above $110 a barrel with no strong rally.
In December OPEC cut it oil production by 465,000 barrels to 30.4 million barrels a day. This was an important market driver since the organization supplies about 40% of the global oil. The new output has the lowest volume since October 2011. On a Jan. 16 the group pointed in a report the output cut was on the back of Saudi Arabia’s reduction. OPEC estimated it will need average 29.6 million to supply the consumers’ demand in 2013.Despite the cut the group still produces 800,000 barrels per day more than the estimated quantity. There won’t be any need for OPEC to cut down the volume of its crude supply if economies are still struggling.
Recently the US has developed strong production from oil shale deposits. The output is in its earliest stage so it would be difficult for the countries to match the powerful industry. Though, there is a catch. No one knows how long these deposits would last. So, maintainable growth is still arguable when it comes to longer terms.
There would come a point in time when the global oil production will start to decline from the highest level it will ever reach. But the record low oil prices won’t appear in the near future.
