09 October 2014 – Global oil demand has weakened in key markets driving down average oil prices for the third quarter, according to the latest oil market update by National Australia Bank.
The quarterly update showed crude oil prices have fallen sharply on the back of a slump in demand and ample supply.
Despite conflict in Iraq threatening to cut off supplies, prices began to drop as slowing economic growth in China, weakness in Japan and malaise in Europe pushed demand lower.
“We have cut our forecasts for crude oil prices accordingly over the medium term,” the report said.
“We expect that that Brent will average US$103 per barrel in 2015.”
However, NAB said some optimism has returned to the US, UK and Indian markets.
Global oil supply increased throughout the year, particularly in the third quarter.
The US Energy Information Administration reported that global supply was 91.96 million barrels in August, up 2.1% on the corresponding period in the previous year.
Higher US production from unconventional sources and a restart of production in Libya had pushed supply up over the quarter.
NAB said this might force OPEC members to cut their production quotas, and added members are set to discuss production at the November meeting.
Exploration levels were higher throughout the third quarter with the Baker Hughes global rig count reaching 3643, up 6.6% on the same period in 2013, but NAB said “we expect that exploration activity could ease in the coming months in response to lower crude oil prices”.
*Bianca Bartucciotto – Upstreamonline
