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UPDATE 1-OPEC sees lower 2015 demand for its oil, Saudi output still high
November 12, 2014 / 1:42 PM / 3 years ago

UPDATE 1-OPEC sees lower 2015 demand for its oil, Saudi output still high

* Report points to 1 million bpd supply surplus in 2015

* Saudi Arabia reports little change in October output

* Leaves 2015 global demand, supply forecasts steady (Releads, adds details from report)

By Alex Lawler and Dmitry Zhdannikov

LONDON, Nov 12 (Reuters) - 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.

Saudi Arabia, unusually, has not commented publicly on the fall in oil prices to their lowest since 2010, which has prompted industry watchers to wonder whether the kingdom may be moving away from a policy of managing the market and instead pursuing geopolitical goals.

The kingdom had said in the past it adjusts its production according to market needs.

But the lack of response so far has 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 their Syrian policies.

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) - 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 report, written 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, despite rising world demand, OPEC expects demand for its oil to fall in 2015 as higher supply outside the group, particularly in the United States due to its shale energy boom, squeezes its market share.

Global demand for OPEC crude will fall by 245,000 bpd to 29.20 million bpd in 2015, unchanged from last month. That suggests a surplus of close to 1 million bpd in 2015 if OPEC keeps output at October’s 30.25 million bpd, as assessed by secondary sources cited by the report.

OPEC members including Kuwait have said a cut in output at the 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 David Clarke and Giles Elgood)

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