World Crude Oil Market - Speculative Projection for 2017

by Eduardo Petazze
08/04/15
Based on data released by the US Energy Information Administration (EIA) for its monthly report Short-Term Energy Outlook, we estimated the
demand and supply of crude oil by 2017, in order to analyze the possible closure of the gap of over-production, the main cause of depression in international
oil prices.

Main assumptions

It has been introduced a correction in the OPEC crude oil production, projected by the EIA for the rest of 2015 and 2016, in order to keep around
30.5 million barrels per day.
Since the 2016/2017 production increases in Libya (improving internal conditions) and Iran (implementation of nuclear agreements with the
West), this increase was deducted from the Saudi oil production, with cuts just under 4% in both 2016 and 2017
It is assumed that oil production in the US, Canada and Brazil continue to grow, but at a substantially lower than the expansion rate of the period
2013/2016.
It is assumed that Russia's production will stop falling by 2017, as a result of overcoming its international geopolitical conflicts.
A recovery in oil production in Yemen, under the patronage of Saudi Arabia is assumed.
A recovery in demand for the EU-28, Japan and Russia is projected. In 2017 it is estimated that global demand will increase by around 1.60 mm
bl/day from 2016, surpassing by nearly 0.15 mm bl/d growth in demand for the years 2011 and 2013

Annual Summary of the supply and demand of crude oil and other liquids

Crude Oil

World Consumption

OPEC Supply

Non-OPEC supply

million barrels per day

yearly change
World Oil Production and
Consumption
2011 2012 2013 2014 2015 2016 2017
2011
2012
2013
2014
2015
2016
2017
North America
16.68 17.92 19.35 21.21 21.98 22.46 22.55
3.5%
7.4%
8.0%
9.6%
3.7%
2.2%
0.4%
Canada
3.60 3.86 4.08 4.39 4.44 4.65 4.74
4.5%
7.3%
5.7%
7.6%
1.1%
4.8%
1.9%
Mexico
2.96 2.94 2.92 2.82 2.76 2.64 2.59
-0.7%
-0.6%
-0.9% -3.2% -2.0% -4.4% -2.0%
USA
10.12 11.12 12.36 14.00 14.78 15.17 15.23
4.4%
9.8% 11.2% 13.2%
5.6%
2.7%
0.3%
Central / South America
4.84 4.81 4.91 5.16 5.35 5.43 5.48
1.4%
-0.7%
2.1%
5.1%
3.7%
1.5%
0.9%
Argentina
0.75 0.72 0.71 0.71 0.72 0.73 0.74
-4.2%
-3.0%
-2.1%
0.5%
1.6%
1.2%
1.2%
Brazil
2.68 2.65 2.69 2.95 3.12 3.19 3.22
-1.0%
-1.2%
1.5%
9.5%
6.0%
2.2%
0.9%
Colombia
0.94 0.97 1.03 1.02 1.01 1.01 1.01
16.4%
3.3%
6.4% -1.3% -0.5% -0.4%
0.2%
Other
0.48 0.47 0.48 0.49 0.49 0.50 0.51
-1.1%
-2.1%
3.0%
1.3%
1.6%
1.7%
1.7%
Europe
4.33 4.02 3.84 3.88 3.59 3.45 3.34
-6.5%
-7.2%
-4.5%
1.2% -7.5% -3.9% -3.4%
Norway
2.05 1.93 1.85 1.90 1.83 1.82 1.81
-4.0%
-6.0%
-4.1%
3.1% -3.9% -0.7% -0.6%
UK
1.08 0.92 0.83 0.80 0.61 0.50 0.41
-17.8% -14.9% -10.3% -2.8% -23.7% -18.6% -18.7%
Other North Sea
0.24 0.22 0.19 0.19 0.18 0.18 0.18
-13.0%
-8.7% -13.0% -0.9% -2.4% -1.2%
0.0%
Onshore
0.96 0.95 0.98 0.99 0.97 0.95 0.94
5.6%
-0.6%
2.4%
1.2% -2.1% -1.1% -1.1%
Eurasia
13.50 13.61 13.79 13.91 13.90 13.75 13.80
2.0%
0.9%
1.3%
0.9% -0.1% -1.1%
0.4%
Azerbaijan
0.99 0.93 0.88 0.86 0.87 0.87 0.87
-4.7%
-6.0%
-5.6% -2.7%
1.8%
0.1%
0.1%
Kazakhstan
1.64 1.61 1.66 1.72 1.72 1.72 1.73
1.8%
-2.0%
3.3%
3.7%
0.0%
0.0%
0.3%
Russia
10.41 10.59 10.76 10.85 10.80 10.66 10.72
2.6%
1.8%
1.6%
0.8% -0.5% -1.3%
0.6%
Turkmenistan
0.22 0.24 0.26 0.28 0.28 0.28 0.28
9.9%
9.6%
6.3%
6.4% -0.1%
1.2%
1.1%
Other Eurasia
0.24 0.24 0.23 0.21 0.23 0.21 0.20
3.2%
0.6%
-1.7% -10.6% 10.2% -6.7% -6.7%
Middle East
1.54 1.33 1.22 1.18 1.19 1.23 1.28
-4.6% -13.8%
-8.0% -3.2%
1.0%
3.3%
3.8%
Oman
0.89 0.92 0.95 0.95 0.98 1.02 1.06
3.8%
3.7%
2.3%
0.7%
2.8%
4.1%
4.1%
Syria
0.37 0.17 0.08 0.03 0.03 0.03 0.03
-10.9% -54.4% -55.8% -56.6% -1.2% -3.7% -3.6%
Yemen
0.22 0.17 0.13 0.13 0.11 0.11 0.12
-22.4% -21.9% -22.2% -4.3% -12.3% -0.6%
4.6%
Other
0.05 0.06 0.07 0.07 0.07 0.07 0.07
3.6% 12.9%
9.8%
3.8%
2.2%
2.3%
1.7%
Asia and Oceania
8.99 9.04 9.00 9.01 9.17 9.27 9.38
-1.5%
0.5%
-0.5%
0.2%
1.7%
1.1%
1.1%
Australia
0.53 0.52 0.45 0.47 0.48 0.50 0.51
-11.5%
-2.1% -14.8%
5.1%
3.2%
2.9%
3.1%
China
4.36 4.40 4.50 4.53 4.56 4.57 4.59
0.4%
0.9%
2.1%
0.6%
0.7%
0.3%
0.3%
India
1.00 0.99 0.98 0.98 0.99 1.00 1.01
3.7%
-0.3%
-1.1% -0.4%
1.5%
0.9%
0.9%
Indonesia
1.01 0.97 0.94 0.90 0.93 0.95 0.98
-2.9%
-3.6%
-3.6% -4.1%
2.7%
2.8%
2.8%
Malaysia
0.67 0.68 0.67 0.70 0.74 0.76 0.79
-10.1%
1.3%
-1.5%
4.3%
6.3%
3.2%
3.1%
Vietnam
0.32 0.36 0.35 0.32 0.31 0.31 0.31
0.5% 12.3%
-2.7% -10.6% -1.9% -0.3% -0.3%
Other
1.09 1.10 1.11 1.13 1.16 1.18 1.19
-1.5%
0.9%
0.8%
1.7%
2.7%
1.6%
1.6%
Africa
2.60 2.26 2.34 2.29 2.21 2.21 2.22
-1.1% -13.0%
3.7% -2.0% -3.7% -0.1%
0.6%
Egypt
0.72 0.71 0.69 0.66 0.63 0.60 0.58
1.4%
-1.0%
-2.8% -4.5% -5.0% -4.8% -3.7%
Equatorial Guinea
0.30 0.31 0.29 0.27 0.24 0.21 0.18
-7.3%
4.3%
-6.6% -8.0% -11.3% -12.0% -12.1%
Gabon
0.24 0.24 0.24 0.24 0.24 0.22 0.21
-0.7%
0.1%
-1.3%
0.3% -1.9% -6.4% -6.6%
Sudan + Sth Sudan
0.46 0.11 0.25 0.26 0.25 0.25 0.25
-7.8% -74.8% 116.9%
5.1% -3.0% -0.4% -0.4%
Other
0.88 0.88 0.87 0.86 0.85 0.93 1.00
3.2%
-0.3%
-0.8% -0.7% -1.2%
8.6%
8.3%
Total non-OPEC liquids
52.47 52.98 54.45 56.65 57.39 57.81 58.06
0.7%
1.0%
2.8%
4.0%
1.3%
0.7%
0.4%
Opec Non-crude liquids
6.08 6.35 6.37 6.35 6.56 6.70 6.83
10.5%
4.6%
0.3% -0.4%
3.4%
2.0%
2.0%
Algeria
1.27 1.25 1.19 1.15 1.10 1.05 1.00
-2.1%
-1.4%
-4.9% -3.5% -4.3% -4.5% -4.6%
Angola
1.70 1.73 1.74 1.68 1.75 1.70 1.67
-8.3%
1.9%
0.7% -3.5%
4.2% -2.6% -2.2%
Ecuador
0.50 0.50 0.53 0.56 0.57 0.58 0.59
2.8%
0.7%
4.6%
5.7%
2.2%
1.8%
1.7%
Iran
3.66 2.99 2.68 2.80 2.80 2.87 2.93
-2.4% -18.3% -10.2%
4.4%
0.0%
2.3%
2.4%
Iraq
2.60 2.96 3.03 3.34 3.59 3.60 3.61
9.5% 13.8%
2.4% 10.4%
7.3%
0.3%
0.4%
Kuwait
2.48 2.59 2.60 2.57 2.59 2.60 2.61
8.6%
4.3%
0.6% -1.2%
0.9%
0.3%
0.3%
Libya
0.47 1.37 0.92 0.47 0.55 0.86 1.37
-71.5% 190.8% -32.6% -49.0% 17.1% 56.7% 58.8%
Nigeria
2.13 2.10 1.95 2.00 2.13 2.20 2.28
4.0%
-1.2%
-7.2%
2.8%
6.1%
3.5%
3.5%
Qatar
0.85 0.75 0.73 0.72 0.67 0.61 0.56
0.2% -11.5%
-3.0% -1.7% -7.3% -8.3% -8.3%
Saudi Arabia
9.42 9.79 9.65 9.70 9.63 9.25 8.90
7.3%
4.0%
-1.5%
0.5% -0.7% -3.9% -3.8%
UAE
2.56 2.68 2.70 2.70 2.70 2.70 2.70
11.2%
4.9%
0.6%
0.0%
0.0%
0.0%
0.0%
Venezuela
2.40 2.40 2.40 2.40 2.40 2.40 2.40
14.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Total OPEC Crude Oil
30.02 31.11 30.12 30.08 30.46 30.42 30.62
0.9%
3.6%
-3.2% -0.1%
1.3% -0.1%
0.7%
OECD
46.33 45.87 46.03 45.67 45.91 45.93 46.29
-1.3%
-1.0%
0.3% -0.8%
0.5%
0.0%
0.8%
USA
19.15 18.77 19.24 19.39 19.74 19.85 19.99
-1.6%
-2.0%
2.5%
0.8%
1.8%
0.6%
0.7%
Canada
2.31 2.35 2.43 2.41 2.39 2.39 2.39
1.2%
1.8%
3.4% -1.0% -0.9%
0.0%
0.2%
Europe
14.24 13.78 13.62 13.41 13.32 13.27 13.39
-2.9%
-3.3%
-1.2% -1.5% -0.7% -0.4%
1.0%
Japan
4.44 4.70 4.53 4.29 4.14 4.08 4.13
0.3%
5.6%
-3.4% -5.3% -3.5% -1.4%
1.2%
Other
6.18 6.28 6.21 6.17 6.33 6.34 6.38
1.2%
1.7%
-1.1% -0.7%
2.5%
0.3%
0.5%
Non-OECD
42.48 43.85 45.16 46.38 47.18 48.28 49.52
5.2%
3.2%
3.0%
2.7%
1.7%
2.3%
2.6%
Former Soviet Union
4.56 4.66 4.81 4.88 4.69 4.61 4.67
10.2%
2.2%
3.2%
1.5% -3.8% -1.8%
1.4%
Europe
0.68 0.67 0.68 0.72 0.73 0.74 0.75
3.0%
-0.2%
0.5%
6.6%
1.2%
1.3%
1.8%
China
9.51 9.98 10.30 10.67 11.00 11.34 11.69
1.9%
5.0%
3.2%
3.6%
3.1%
3.1%
3.1%
Other Asia
10.87 11.18 11.45 11.67 11.88 12.20 12.49
4.0%
2.9%
2.4%
1.9%
1.8%
2.7%
2.4%
Other Non-OECD
16.87 17.36 17.92 18.44 18.88 19.38 19.90
6.6%
2.9%
3.3%
2.9%
2.4%
2.7%
2.7%
Total
88.81 89.72 91.19 92.05 93.09 94.21 95.81
1.7%
1.0%
1.6%
0.9%
1.1%
1.2%
1.7%
Annual change (mm bl/d)
1.46 0.91 1.47 0.85 1.04 1.12 1.60
World Oil and Liquids Balance
-0.24 0.72 -0.25 1.04 1.33 0.72 -0.29
Estimates of supply and demand until March 2015 according to the US Energy Information Administration (EIA) data
Projected for 2015/2016 data correspond to official projections of US-EIA, except for the production of crude oil from OPEC.
The projected data for 2017 are our own estimate

Conclusions
Depending on the occurrence of the assumptions detailed above, the period of global oversupply of crude oil, which began in the first quarter of 2014, will be
completed in the 1st. quarter of 2017, provided that Saudi Arabia does not exceed production of 9.5 milion barrels.
Under these assumptions, on average for 2017, prices could stabilize in the following table:
Average $/bl
WTI Spot
OPEC basket
Brent Spot
Estimate
Latest data

2013
98.0
105.9
108.6

2014
Dec-2014 Mar-2015
93.2
59.3
47.8
96.3
59.5
52.5
99.0
62.3
55.9

2017
62.0
66.0
69.0