Oil prices projected to recover after late 2020: report

Source:Xinhua Published: 2017/10/7 16:31:55

Global oil prices will remain in the range of 50-60 US dollars a barrel until late 2020 and will increase thereafter, according to Oil & Gas Journal.

A report published Friday on the journal's website quoted McKinsey Energy Insights (MEI) as saying that the outlook is driven by a mixture of negative -- supporting lower prices -- and positive -- supporting price recovery -- market fundamentals, which are expected to impact the speed of market rebalancing and price recovery in the medium and long terms.

MEI projected that the global gross domestic product (GDP) growth will slow to 2.4-2.7 percent through 2030. Oil intensity, measured by million barrels per day over GDP, will be 40 percent lower in 2030 compared with the level in 2000.

On the supply side, MEI said average production costs have been dramatically reduced thanks to lower labor costs, a stronger US dollar, decreased operation services, and less maintenance.

MEI believed that the recent improvements in project costs are expected to be partially maintained, with production costs in 2030 to be 15-20 percent less than the costs in 2014.

According to MEI, US shale oil output will keep rising despite low prices, reaching 6.6 million barrels a day by 2021 and 8 million barrels a day by 2025 because of improved breakevens and capital availability.

Growth will be mostly driven by drilling in the Permian basin in the west of the US state of Texas and the southeast of the US state of New Mexico, it added.

In the long term of 2020-30, MEI estimated that exploration and production companies will need to add 35 million barrels a day of crude production from unsanctioned projects by 2030 to meet demand. Under these circumstances, 2025-30 marginal costs are projected to reach 60-70 dollars a barrel.

Posted in: ECONOMY

blog comments powered by Disqus