BAGHDAD: OPEC predicted oil prices will rebound in coming years,and the cartel said it expects to reduce its own production by 2019.
The report comes after global oil pricesthis week fell to levels not seen since 2004 amid an increasing glut.
In its closelywatched annual World Oil Outlookpublished Wednesday, the Organization of the Petroleum Exporting Countries said it expects the price of its basket of crudes to rise to $70 a barrel in 2020 and $95 a barrel in 2040, comparedwith $30.74 a barrel on Monday.
Brent crude futures, the global benchmark, fellto $36.11 a barrel on Tuesday, the lowest settlement price since July 2, 2004. On Wednesday, Brent gained $1.25 a barrel, or 3.5%, to $37.36.
The “need to develop oil production in more expensive areas will drive long-term oil prices higher,” OPECsaid inits report. Much of the recent oversupply has been caused by the extraction of costly reserves in the U.S. and Canada, which started to slow after oil prices fell by more than half in the past year.
On top of NorthAmerican competition, OPEC is facing the return of Iranian production after sanctions are lifted on Tehran next year.Nevertheless, OPEC members earlier this month said they would keep pumping full-tilt and rejected any output cap.
The organization’s report suggests the group might have to change tack. It said it expects to cut its own supply to 30.6 million barrels a day in 2019. Thatis more than one million barrels a day lower than its production of 31.7 million barrels a day in November, which was its highest in three years.
Though OPEC has frequently revised its numbers in recent months, the production cut is expected because rival output is forecast to show resilience and the global rise in oildemand is seen being underminedby new government policies to cut energy consumption, according to data in the report.
The currentdecline in oil pricesis driving up demand for oil,the report said, forecasting a rise to 97.4 million barrels a day by 2020, compared with an estimated 92.8 million barrels a day this year. But OPECadded that the impact of lowercrude prices on demand will be mitigated by high taxes on motor fuel along with measures to increase fuel efficiency, notably in China.
On the other hand, technological breakthroughs and a rebound in oil prices mean North American production likely will prove resilient despite its high costs.
The OPEC report forecast that oil supply from the U.S. and Canada will reach 19.8 million barrels a day by 2020, an increase of 2.5 million barrels a day over 2014. Even production of U.S. light-tight oil—in which hydraulic-fracturing techniques are used to extract crude from shale formations,at a cost often higher than $50 a barrel—is expected to rise to 5.2 million barrels a day in 2020 from 4.4 million barrels a day this year, according to the organization.
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