ESAI 5-year oil outlook sees tenuous balance

Aug. 14, 2017
In its recent Five-Year Outlook, ESAI Energy points out that the call on Organization of Petroleum Exporting Countries crude will remain under tremendous pressure over the next 5 years.    

In its recent Five-Year Outlook, ESAI Energy points out that the call on Organization of Petroleum Exporting Countries crude will remain under tremendous pressure over the next 5 years.

The outlook projects non-OPEC supply of crude oil and condensate to add about 2.3 million b/d to global supplies. Seventy percent of that growth will come from the US despite a slowdown in shale growth on the horizon. Non-OPEC NGLs and alternative fuels will add another 1.9 million b/d of supply. NGL supply from OPEC will add another 900,000 b/d.

Meanwhile, growth in total global oil demand is slowly decelerating as low oil prices have supported demand in several sectors, especially government stocking and petrochemicals. But, most of the petrochemical-led growth is met with gas-derived products. Thus, growth in demand for crude-derived products is actually slowing more quickly, ESAI said.

Modest crude-derived demand and continued non-OPEC expansion will complicate matters for OPEC even as the market rebalances. ESAI Energy Principal Sarah Emerson concludes, “If OPEC wants to keep oil prices in the $50s and hit $60, the organization will have to keep a lid on supply for several more years.”