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The long term oil price outlook
The US is soon posed to become the world’s largest oil producer according to the International Energy Agency’s (IEA) World Energy Outlook 2013 report. This shift would push the US ahead of Russia and Saudi Arabia, but the US won’t stay at the top for long.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, says that “we are seeing US oil production ramping up dramatically.” The increase in production will make the US the largest oil producer in 2016, which is one year ahead of expectations. US shale gas could lead to Europe and Japan losing one third of their share of exports of energy intensive goods. The OPEC does not have much cause to worry because in 2020 US production will begin to decline according to Hansen.
Other notable shifts according to the IEA include India replacing China as the primary contributor to demand growth after 2020.
IEA expects that the price of oil will increase to 128 pb in 2035, but Hansen tells a different story. He sees the market remaining relatively stable. From an investment perspective, Hansen predicts that demand for WTI crude will grow causing Brent‘s current premium to decline.
01:47 minutes
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