Price Rout Extended As Demand Falls Further Behind Supply

The IEA and OPEC have both slashed their forecasts for the ‘call on OPEC’ crude for both this year and next. Both cut their 2015 forecasts by around 300,000 b/d to 28.9mn b/d, some 1.5mn b/d below current OPEC output. With Saudi Arabia holding output steady at 9.6mn b/d and Iraq and Iran planning output gains during 2015, something has to give. At the moment that something is prices.

The front month January Brent contract was trading at under $63/B as MEES went to press on 12 December – down by 44% from the $115/B mid-June peak.

Prices have fallen by $14/B in the two weeks since OPEC’s 27 November decision to leave its current 30mn barrel ceiling unchanged. (CONTINUED - 1621 WORDS)


table OPEC Vs IEA Supply-Demand Balance, November 2014 Forecasts (Mn B/D)
table OPEC Well-Head Production, November 2014 (Mn B/D, Mees Estimates)