An OPEC state of mind

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Given the election is dominating much of the sentiment in markets today, and given the timely release of OPEC’s World Oil Outlook, today’s post digs into some of the longer-term trends emerging in the oil market. Hark, here are six things to consider:

1) OPEC’s World Oil Outlook (WOO) is a comprehensive 428-page (!) outlook on the global oil market. Publishing a long-term outlook puts you on a hiding to nothing (you’re never gonna be right), but OPEC is quick to highlight the goal of this publication is to promote discussion, and not to predict the future. That said, we can place a bit more weight on some of the more near-term projections in this report.

In terms of demand, the cartel projects it will increase from 93mn bpd last year to 99mn bpd by 2021, reaching 109mn bpd by 2040. Developing nations will lead demand growth (no surprise there), driven by the transportation sector.

The total number of passenger cars are expected to double by 2040, rising to 2.1 billion. Most of this increase comes from developing countries, amid a rising vehicle penetration rate. In contrast, oil demand from the road transportation sector in the OECD is expected to fall by 6.7mn bpd by 2040. 

global passenger fleet.jpg

2) The cartel also projects that U.S. and Canadian crude oil exports will rise to 1mn bpd by 2020, doubling to 2mn bpd by 2035. (n.b., Canada currently exports over 3mn bpd of crude to the U.S. by pipe and water, but has only exported