 |
Crops |
|
Livestock |
|
Energy |
|
Metals |
|
|
| Oil | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alan Copeland |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In early December 2008, oil prices in West Texas Intermediate (WTI) terms, traded just above US$40 a barrel, the lowest prices observed since late 2004. This compares with an average of US$112 a barrel in the first half of 2008 when prices were supported by growing world oil demand, weak non-OPEC output growth and strong investment demand for commodities. Since oil prices peaked at US$147 a barrel in July 2008, they have fallen by 72 per cent and are estimated to have averaged US$87 a barrel in the second half of 2008 and around US$60 a barrel in the December quarter. The rapid fall in oil prices has been caused by falling demand; firstly as consumers around the world responded to record high prices and; secondly, in response to the global financial crisis which has led to slower economic growth in most developing economies and economic contractions in the United States, the euro area and Japan in the September quarter. For 2008 as a whole, oil prices are estimated to average around US$99 a barrel, an increase of 37 per cent compared with 2007. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risks to the forecast | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| While world oil prices are forecast to fall significantly in 2009 compared with 2008, considerable uncertainty remains about the short-term outlook. On the demand side, considerable uncertainty stems from a range of sources including unexpected changes in world economic growth and seasonal oil consumption. In 2009, world economic growth is assumed to be around 2.5 per cent. This is a significantly slower rate of growth than in 2008 which is expected to result in world oil demand growing at a lower rate. However, if world economic growth in 2009 is less than the assumed rate of 2.5 per cent, it is possible oil consumption growth would be lower than forecast, resulting in downward pressure being placed on prices. Conversely, if world economic output grows faster than 2.5 per cent, this could result in oil prices averaging higher than forecast. During the northern hemisphere winter, a significant proportion of oil is consumed for heating purposes. Above average temperatures, as have occurred over the past two winters, could be expected to result in lower demand for heating oil. There is also uncertainty regarding the supply of oil in 2009, namely OPEC behaviour and the growth of non-OPEC supply. In late October, OPEC announced a reduction in its production quota of around 1.5 million barrels a day to 27.3 million barrels a day. There is the potential for OPEC to make further cuts to production quotas at the next meeting on 17 December. Saudi Arabia stated that US$75 a barrel is a fair price for oil. Given that Saudi Arabia is OPEC’s largest producer, OPEC is expected to give consideration to making further production cuts while oil prices remain below US$75 a barrel. Potential delays to the start up of new production facilities and faster than expected depletion rates in oil fields in the North Sea and Mexico are an additional risk to the outlook. The price forecast in 2009 is based on the premise that non-OPEC supply will increase by around 2 per cent. However, many of these projects have already been delayed as a result of a worldwide shortage of equipment and labour. Further delays to projects or difficulties in ramping up production to full capacity could reduce non-OPEC supply growth which may place upward pressure on prices. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Growth in world oil consumption to moderate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In 2009, world oil consumption is forecast to increase marginally (by 0.3 per cent) to around 86.5 million barrels a day, compared with an average annual growth rate of 2 per cent a year from 2004 to 2007. The forecast sharply lower rate of consumption growth in the short term reflects increasing non-OECD demand being largely offset by falling OECD consumption. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil consumption growth to moderate in non-OECD economies... | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-OECD oil consumption in 2008 is estimated to have increased by 4 per cent to average around 38.4 million barrels a day. This increase is similar to that of 2007. The growth in oil consumption in 2008 mainly reflects strong economic growth in the first half of the year. Weaker assumed economic growth and falling commodity prices will reduce oil demand growth in most non-OECD economies in 2009, with consumption growth forecast to fall to around 3 per cent. In China, oil demand growth is forecast to fall to 3.7 per cent in 2009, compared with 5.3 per cent in 2008, as a result of lower economic growth. Consumption growth in gasoline and diesel is expected to be most affected by the assumed slower economic growth in China. The rate of growth of oil demand in the Middle East, Latin America and the Russian Federation is also expected to fall reflecting declining commodity prices. Over the past five years, economic growth and oil consumption in these regions have been supported by high commodity prices including oil. With commodity prices having fallen significantly in the second half of 2008, the fiscal position of many of these economies will be weaker, leading to lower economic growth in the short term. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ...and fall in OECD economies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OECD oil consumption is estimated to have declined by 1 per cent in 2008 and is forecast to fall by a further 2 per cent in 2009 to average 47.8 million barrels a day and 47.1 million barrels a day, respectively. The fall in oil consumption reflects a contraction of economic growth, particularly in the United States and western Europe, and consumers’ responses to higher oil prices in the first half of 2008. In the first three quarters of 2008, US oil consumption declined by 6 per cent compared with the same period in 2007. This is expected to translate into US oil consumption falling by 5 per cent in 2008 as a whole to 19.6 million barrels a day. Economic contraction in the United States in 2009 is expected to result in oil consumption falling by a further 2 per cent to 19.2 million barrels a day. In OECD Europe, oil consumption in 2008 is estimated to have fallen by 1 per cent to around 15 .2 million barrels a day. This is the third consecutive year oil consumption has fallen. In 2009, OECD oil consumption is forecast to fall by a further 1 per cent to around 15 million barrels a day. Falling consumption in OECD European economies reflects the weak economic outlook for the region. Furthermore, the fall in oil consumption is expected to occur across the entire oil product range including gasoline, diesel and jet fuel. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-OPEC production forecast to increase | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In 2008, non-OPEC production is forecast to average around 49.7 million barrels a day, similar to levels in 2007. Production at a number of new fields commenced during the year. However, this was offset by production losses associated with hurricanes in the Gulf of Mexico, declining production at mature fields and unplanned production outages, particularly in the Caspian region. Non-OPEC oil production in 2009 is forecast to increase by 1 per cent to 50.1 million barrels a day, supported by the start up of new production in the United States and Brazil. In the United States, oil production in 2008 is estimated to have averaged around 7.5 million barrels a day, similar to 2007 levels. Increased production from new fields in the Gulf of Mexico such as Neptune, Thunder Horse and Blind Faith in the last quarter of 2008 is estimated to have been offset by reduced production because of production shutdowns associated with hurricanes during September. It is estimated around 1 million barrels a day of production was lost during September as a result of hurricanes Gustav and Ike. During the last quarter of 2008, it is estimated an average of around 300 000 barrels a day of production will be lost as a result of hurricane related damage and planned shutdowns for maintenance. In addition, a 250 000 barrel a day offshore pipeline is scheduled to be out of service between October 2008 and March 2009. Oil production in 2009 is forecast to increase by around 3 per cent to 7.9 million barrels a day, reflecting higher production from fields which commenced production in late 2008 and fields scheduled to start production during 2009. In Brazil, oil production in 2009 is forecast to increase by around 10 per cent to 2.5 million barrels a day. The start of the Frade field in 2009 and higher output from a number of deepwater fields which commenced operation in 2008 are expected to support this growth. In addition, Brazil’s production of ethanol in 2009 is forecast to increase by around 15 per cent to 400 000 barrels a day. The production increases in 2009 in the United States and Brazil will be partially offset by falling production in Mexico and the North Sea. Mexico’s crude oil production is forecast to continue falling in the short term in line with declining production in the Cantarell field. Cantarell is one of the world’s largest producing oil fields with production of around 1.5 million barrels a day in 2007. However, production at the field is declining from an estimated peak production rate of 2 million barrels a day in 2004. Production at a number of nearby fields is increasing. However, this will not be sufficient to offset the declining production from the Cantarell oil field, which accounts for around 50 per cent of Mexico’s crude oil production. The United Kingdom’s and Norway’s oil production from the North Sea is estimated to fall by around 6 per cent in 2008 and around 10 per cent in 2009. The falling production reflects the mature nature of oil fields in this region. As these fields mature they tend to suffer from longer and more frequent technical outages and equipment failures. In 2009, the United Kingdom’s and Norway’s crude oil production is forecast to average 1.3 million barrels a day and 2.3 million barrels a day, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPEC to reduce output in 2009 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In 2008, OPEC crude oil production is estimated to have averaged around 32 million barrels a day, an increase of around 3 per cent compared with 2007. The increased oil production reflects an increase in production quotas in the first half of the year as oil prices increased rapidly. In 2009, OPEC crude oil production is forecast to fall, reflecting cuts to production quotas announced in October 2008 and the assumption further cuts will be made in December. The reduction in OPEC production quotas is expected to result in OPEC spare capacity rising in 2009. At the end of October 2008, OPEC spare capacity was estimated to be around 2.3 million barrels a day, up from 1.5 million barrels a day in July. This figure is expected to increase with further cuts to production quotas and the completion of new production facilities in late 2008 and in the first half of 2009. A significant contributor to increased OPEC production and capacity in 2009 will be natural gas liquids. Significant new capacity was commissioned during 2008 including the Khursaniyah field in Saudi Arabia (500 000 barrels a day), Agbami in Nigeria (200 000 barrels a day) and South Pars phase 6 in Iran. In addition, the 1.2 million barrels a day Khurais and 300 000 barrels a day Hawiyah crude oil projects in Saudi Arabia are expected to enter production during 2009. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Australia’s oil production and exports to increase | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In 2008-09, Australia’s crude oil and condensate production is forecast to total 27 gigalitres (average 470 000 barrels a day), an increase of 6 per cent from 2007-08. In September, the Vincent and Angel oil field projects were completed with capacities of 100 000 barrels and 50 000 barrels a day, respectively. Both fields are located off the north-west coast of Australia. Increased production from the Stybarrow field is also expected in 2008-09, following its completion in late 2007. In addition, the Apache Energy operated Van Gogh project is scheduled to be completed in early 2009, with production increasing toward capacity during the first half of 2009. Reflecting increased production in 2008-09, Australia’s crude oil and condensate exports are forecast to increase by 3 per cent to 16.4 gigalitres. It is assumed a significant proportion of production from fields in the Bonaparte and Carnarvon Basins will be exported given their proximity to Asian refining markets. Reflecting a fall in world oil prices, the value of Australia’s oil exports is forecast to fall by 2 per cent to $10.3 billion. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||