Volatility in Energy Prices Bahattin Buyuksahin

Transcript:Volatility in Energy Prices Bahattin Buyuksahin:
Volatility in Energy Prices Bahattin Buyuksahin IEA, OIMD Global oil demand: exceeding 95 mb/d Global oil product demand rises from 88.0 mb/d in 2010 to 95.3 mb/d in 2016 A total increase of 7.3 mb/d… …equivalent to an average yearly growth of 1.3% or 1.2 mb/d over the outlook period Assumptions Global GDP growth averages 4.5% over 2010-2016 (IMF) Oil price (Brent) averages roughly $102/bbl (in nominal terms) over 2010-2016, based on late-April futures curve Oil use efficiency improves by 3% per year on average, in line with recent trends A new world emerges Crucially, since non-OECD income growth will remain the primary demand driver, higher international oil prices are likely to have a minor effect… …except in the OECD, compounding market saturation, efficiency gains, behavioural changes and interfuel substitution Non-OPEC supply adjusted higher – growth still to come largely from non-crude Non-OPEC total oil supply is projected to rise from 52.7 mb/d in 2010 to 55.4 mb/d in 2016, or +0.4 mb/d per annum Outlook revised higher, largely on significantly stronger growth in US light tight oil NGLs show largest increment (+0.7 mb/d), followed by non-conventionals (+0.6 mb/d ), global biofuels/refinery processing gain (each +0.5 mb/d) Non-OPEC crude rises +0.4 mb/d by 2016 Updated upstream cost curve indicates ‘marginal barrel’ at an affordable $40-100/bbl Non-OPEC marginal barrel is affordable at $40-100/bbl, with many oil companies testing profitability well below Source remains ‘frontier’ areas such as Canadian oil sands, Brazilian deepwater, Arctic Review of the Year 2010 World gas demand recovered by 7.4% in 2010 Abundant supply was there to meet demand Production increased in all regions North American unconventional gas production continues to impact the world LNG trade increased by 60 bcm to reach 300 bcm Part of the excess of supply was absorbed by resurgent demand Global gas markets tightened in 2010 Yearly demand changes 2006-10 An increase by around 230 bcm OECD recovered by 5.9% Non-OECD rose by 8.9% This overshadows the 2.5% drop in 2009 But the recovery in the OECD is partially an illusion As it is mostly driven by exceptional weather OECD gas demand has recovered to levels 3% above 2008 OECD Europe gas demand reached record levels - 568 bcm (40 bcm above 2009) Growth in North America also driven by low gas prices But demand was actually driven by very cold weather in Europe and OECD Pacific and a hot summer in