OPEC: World Oil Outlook 2012
Opec just released its World Oil Outlook 2012 (very large pdf file) which had this long range price forecast for the price of oil.
Oil price assumption slightly higher than in the previous WOO
This year it is assumed that the OPEC Reference Basket (ORB) nominal price remains at an average of $100/b over the medium-term, before rising with inflation to reach $120/b by 2025. Longer term, real prices are set to rise slightly and nominal prices thereby reach $155/b by 2035. The key basis for making such assumptions for the Reference Case’s medium- to long-term outlook remains the perception of how the costs of supplying the marginal barrel might evolve, as well as taking into account the effects of depletion, an increasing supply of oil from more remote and harsher environments, and the impacts of stricter environmental protection on costs. The extent, to which these costs rise, is tempered by the impacts of continued technological developments.
Does anyone really believe that oil will only be $120/b in 2025?
The reports outlook for coal is not good news from a climate perspective. Opec forecast “coal use reaches similar levels as that of oil, with oil’s share having fallen from 35 percent in 2010 to 27 percent by 2035.” Natural gas use also grows dramatically as this graph shows.
Opec’s outlook is based on an annual global economic growth rate of 3.4% which depends on unlimited access to natural capital and most importantly the Master Resources energy. Should any other forecast from them have been expected?
Brazil slips again
Just a few years ago Brazil’s deep water pre-salt discoveries were being hailed as the next Middle East and forecasts were made it would soon rival producers like Saudi Arabia and Russia. Well as usual it isn’t quite playing out that way.
According to a report in Upstream Brazil’s oil production continues to slide backwards. “Crude oil output fell to an average 1.92 million barrels per day in September, compared with 2 million bpd in August. Production fell 8.4 percent from the 2.099 million bpd the same month a year ago. Oil output was at its lowest level since July 2009.”
Baker Hughes rig count
Baker Hughes reported today that the number of US rigs drilling for oil recovered 16 after last week drop. The natural gas rig count continued it’s now multiple year decline falling 11 more to 413. That is a slip of 51% from year ago levels.