The forecast: Oil supply from the United States, Russia and other non-OPEC countries is expected to drop sharply next year—possibly the steepest decline since the Soviet Union collapsed—because of low prices, the International Energy Agency says in a new forecast released this morning. In its latest monthly report, the IEA says non-OPEC production is expected to drop nearly half a million barrels to 57.7 million barrels a day. It said that would be the largest annual drop since 1992, when non-OPEC supply shrank 1 million barrels after the USSR fell apart. The agency forecast global oil demand would growth this year to a five-year high of 1.7 million barrels a day, before dropping to 1.4 million next year. The Associated Press has the full story.
Anything’s possible: The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel. While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman says in a report outlining cuts to its Brent and WTI crude forecasts through 2016, Bloomberg reports. “The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts write in the report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.” Read the full story.
The fallout: Houston-based Excelerate Energy says it has ended its plans for an LNG export project in south Texas because of falling oil prices and other economic factors. Argus Media reports Excelerate recently asked the US Federal Energy Regulatory Commission to withdraw its application to build a floating LNG export project in Lavaca Bay, Texas, making it the first company to halt its FERC proceedings for US LNG exports. It is unclear if Excelerate is the first company to stop development of a US LNG export project because of low oil prices, as a number of other proposed projects have not entered the expensive FERC construction approval process and have not announced any progress since oil prices started to plummet last summer. Read the full story.
