OPEC PREDICTS $95
OPEC on Wednesday predicted oil prices wouldrebound,butthe cartel said it expects to reduce its own production in the coming years.
The report comes after global oil pricesthis week fell to levels not seen since 2004 amid ballooning oversupply.
In its closelywatched annual World Oil Outlook,published Wednesday, the Organization of the Petroleum Exporting Countries said it expects the price of its basket of crudes to rise to $70 a barrel in 2020 and $95 a barrel in 2040, compared with$30.74 a barrel on Monday.
Brent crude, the global benchmark, fellto $36.35 a barrel on Monday, the lowest settlement price since July 5, 2004.
The "need to develop oil production in more expensive areas will drive long-term oil prices higher," OPEC said inits report. Much of the recent oversupply has been led by the development of costly reservoirs in the U.S. and Canada, which started to slow after oil prices more than halved in the past year.
On top of North American competition, OPEC is facing the return of Iranian production after sanctions are lifted on Tehran next year. Nevertheless, OPEC members earlier this month said they would keep pumping full-tilt and rejected any output cap.
The organization's report suggests the group might have to change tack. It said it expects to cut its own supply to 30.6 million barrels a day in 2019. That is more than one million barrels a day lower than its production of 31.7 million barrels a day in November, which was its highest in three years.
Though OPEC has frequently revised its numbers in recent months, the production cut would come because rival production shows resilience while the global rise in oil demand is undermined by new government policies to cut energy consumption.
The current decline in oil prices is driving up demand for oil,the report said, forecasting a rise to 97.4 million barrels a day by 2020, compared with an estimated 92.8 million barrels a day this year. But OPEC added that the impact of lowercrude prices would be mitigated by high taxes on motor oil along with fuel-efficiency measures, notably in China.
On the other hand, technological breakthroughs and a rebound in oil prices mean North American production likely will prove resilient despite their high cost.
The OPEC report said oil supply from the U.S. and Canada would reach 19.8 million barrels a day by 2020, an increase of 2.5 million barrels a day over 2014.Even production of U.S. light-tight oil—in which hydraulic-fracturing techniques extract crude from shale formations, at a cost often higher than $50 a barrel—is expected to rise to 5.2 million barrels a day in 2020 from 4.4 million barrels a day this year, according to the organization.
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Libya’s oil production increased steeply to the current level of 850,000 b/d from a low point in August 2016 of below 300,000 b/d. Production surpassed 1 million b/d in July.
- Revenue of $7.9 billion increased 6% sequentially - Pretax operating income of $1.1 billion increased 11% sequentially - GAAP EPS, including Cameron integration-related charges of $0.03 per share, was $0.39 - EPS, excluding Cameron integration-related charges, was $0.42 - Cash flow from operations was $1.9 billion; free cash flow was $1.1 billion
“The combination of GE Oil & Gas and Baker Hughes closed on July 3, and we are pleased with our progress during our first operating quarter. Despite the continuing challenging environment, we delivered solid orders growth and secured important wins from customers, advanced existing projects and enhanced our technology offerings in the quarter. We also achieved key integration milestones and made significant progress working as a combined company. I am now more convinced than ever that we combined the right companies at the right time,” said Lorenzo Simonelli, BHGE chairman and chief executive officer.
U.S. Rig Count is up 360 rigs from last year's count of 553, with oil rigs up 293, gas rigs up 69, and miscellaneous rigs down 2 to 2. Canada Rig Count is up 59 rigs from last year's count of 143, with oil rigs up 38 and gas rigs up 21.