World Oil Outlook - Opec

26
$85–95/b to 2020, rising thereafter to $133/b by 2035. This assumption was consistent
with a real price of $80/b in 2010 prices. This represented an upward revision of
around $10/b compared to the previous year’s report, and was made in the midst of
considerable turbulence in prices: between late November 2010 and the end of April
2011, the ORB rose from $81/b to almost $120/b before declining to $103/b by the
beginning of August 2011 (Figure 1.1).
The reasons for the oil market being in a constant state of flux in 2011 were
manifold: the ups and downs of the global economic recovery, Japan’s multiple disasters,
and unrest in parts of North Africa and the Middle East. But speculation
remained a major driving force in the price rise, with increasing investor interest in the
crude oil paper market. Speculative activities persist as an issue in the current market.
This can be seen in the respective size of the paper and physical markets. Since 2005,
there has been a sharp increase in the number of open interest futures and options
contracts. At times, it has surpassed three million contracts per day, which is equiva-
lent to 3 billion b/d. This is 35 times the size of actual world oil demand. Box 1.1,
which explores this subject in detail, shows how current moves to tighten regulation
in the paper markets clearly reflect the concern over the impact that speculation can
have on market stability.
Figure 1.1 NEW
Figure 1.1
OPEC Reference Basket price before and after WOO 2011
130
120
110
100
90
80
70
60
$/b
January
Pre-WOO 2011
April
July
October
2011 2012
WOO 2011 nominal range
to 2020: $85–95/b
October
January
Post-WOO 2011
April
2011 2012
July
October
October