The energy war between the U.S. and its Saudi rivals continues unabated—but OPEC is feeling particularly optimistic about next year’s competition, new reports suggest. As demand for oil rises, OPEC is confident that countries outside of the organization will not be able to keep up.
OPEC notes that, “12-country oil producing group led by Saudi Arabia claims it could be winning the fight to retain market share in the face of its rivals.”
The reality is that, “For 2016, non-OPEC oil supply is now expected to contract by 380,000 barrels a day to average 57.14 mb/d, following a downward revision of 0.25 mb/d.”
In addition to dwindling projections for competitors, OPEC “raised its forecast for world oil demand growth in 2015, predicting it will rise by 1.53 million barrels per day (mb/d) to average around 92.88 mb/d—up 30,000 barrels from the previous month’s forecast—and for 2016.”
OPEC predicted that oil demand would increased, “by around 1.25 mb/d to average 94.14 million barrels a day next year, upping its forecast mainly as a result of better-than-expected consumption in Europe and Other Asia.”
OPEC also indicated that it is ready to meet the increased demand, “as it continued to pump above its official ceiling of 30 million barrels per day in November.”
While some might be happy to OPEC out-supply its competitors, there is still the reality of Iran’s return to producing oil. Poorer members of OPEC, like Venezuela, have asked the group to cut production to boost prices with little success. Oil prices this week have plummeted following the OPEC decision. The decision to not cut production is seen, “largely as a way for OPEC to maintain market share in the face of rivalry from U.S. shale oil producers who have higher-cost production and thus cannot cope as well with low oil prices.”
The energy markets—and emerging markets—have had a very turbulent year and investors have faced a bumpy ride with their portfolio. Our team at Apex Financial Advisors knows that when OPEC makes a move, China changes its economic outlook, or the Federal Reserve holds a meeting, investors have questions and concerns. Our team works with our clients to make sure they feel secure about their portfolio, have a financial plan in place, and make smart investment decisions—not emotional ones. If you have questions or concerns, call our team at Apex Financial Advisors today to find solutions that work for you and your wealth.
Ellyatt, Holly. “OPEC Predicts Rivals’ Supply to Contract in 2016.” CNBC. CNBC, 10 Dec. 2015. Web.