Growth anticipated despite another drop in expected crude oil output, to average 4.35 million barrels a day, this year
CALGARY—Canadian crude oil production will slow this year but will grow before the end of the decade, according to a pair of global energy organizations.
The Organization of Oil Exporting Countries (OPEC) is expecting production to grow more slowly this year than previously expected from countries outside the cartel, including Canada.
In its monthly oil market report, the group said non-OPEC supply is expected to grow by 850,000 barrels per day in 2015, but that’s 420,000 barrels per day lower than it forecast in its previous report.
In Canada, oil output is expected to average 4.35 million barrels a day, which is 20,000 barrels lower than OPEC’s earlier prediction as low oil prices cause operators to trim their budgets.
Meanwhile, in the United States, where huge amounts of crude have been gushing out of shale deposits in Texas and North Dakota, about 130,000 barrels a day are being pared from OPEC’s forecast.
Crude for March delivery was up above US$53 a barrel on Feb. 9—still less than half the US$107 a barrel the U.S. benchmark hit last June.
The drop intensified in late November, after OPEC decided to keep up its production rates rather than cut them as a means to put a floor under global oil prices.
The International Energy Agency (IEA), meanwhile, said Canada’s crude output is expected to grow between now and the end of the decade, but not by as much as previously thought.
The IEA also said the price of crude is poised to recover soon but won’t come close to the levels reached last summer.
In its latest report, the Paris-based organization predicted Canada’s production will grow to just under five million barrels a day by 2020, about 810,000 barrels a day more than in 2014.
However, that is 430,000 barrels a day less that it previously forecast.
Globally, the IEA sees global oil capacity hitting 103.2 million barrels by the end of the decade, a 5.2 million barrel a day increase.
The global figures represent growth of about 860,000 barrels a day annually, a slowdown from the 1.8 million barrel a day increase in 2014.
The group said its prediction of slower growth was prompted by the steep decline in the price of crude oil.
The IEA said the current price recovery is unlike those of the past, because of the sharp increase in production by non-OPEC countries, especially in the U.S., as well as slowing demand in China.
The agency also said that unlike past cycles, the low oil price is not expected to greatly boost economic output, because low demand was itself part of the reason for the market drop.
U.S. output is expected to remain a major source of growth for the period, with its light, tight oil production expected to hit 5.2 million barrels a day in 2020, up from 3.6 million barrels a day in 2014.
The IEA noted that U.S. shale producers can ratchet production up or down in response to prices much more quickly and easily than can their counterparts in the oilsands.
Meanwhile, lower crude prices are not bolstering demand as much as might be expected.
The IEA expects growth in consumption to average 1.2 per cent a year over the forecast period, below the trend of 1.9 per cent before the Great Recession.
Barring any big supply disruption or major change in energy policy, the agency said the market will likely rebalance quickly, but with prices settling substantially below where they’ve been over the last three years.