Crude oil prices are expected to fall only slightly going into 2014. Brent crude oil projected to average $104.8/bbl while WTI to average $96.5/bbl over 2014, said London based Barclays in its recent market report.Barclays expects global crude oil demand to grow by 1.04 mb/d in 2014. “We expect oil consumption

in non-OECD countries to grow by 1.27 mb/d (0.05 mb/d more than the rate of growth we forecast for 2013). The share of growth within this OECD pool is expected to be contributed evenly by countries in Latin America, the Middle East, Asia ex- China, and Africa. The offsetting factor lies in the OECD, where demand growth is expected to decline by 0.23 mb/d (0.1 mb/d less than the rate of decline we forecast for 2013),” the bank pointed.

The supply side is expected to meet these demand requirements, with non-OPEC output forecast to grow by 1.5 mb/d in 2014. This is the fastest projected growth for non-OPEC since the early 1980s, propelled by growing oil production in North America. Within this group, 90% of the growth is expected to come from US tight oil production. Another key difference for 2014 is the expectation that many unplanned outages within the rest of the non-OPEC supply profile will disappear.

Output from South Sudan is expected to remain at 260k b/d (higher y/y by 150k b/d). Unplanned outages in the North Sea are expected to improve, also supported by several new field start-ups that could help offset declines at mature fields, it said.

“Overall, we expect a fairly stable outlook for oil prices in 2014. The potential for the return of large chunks of supply in a staggered manner (especially from Libya and Iraq) is something to keep on the radar as a source of price weakness over the next 3-6 months,” Barclays said.

Source: Barclays