OPEC said demand for its crude will slide to 2020, though less steeply than previously expected, as rival supplies continue to grow.

The organization will need to pump 30.7 million barrels a day by the end of the decade, OPEC said Wednesday in its annual World Oil Outlook. That’s 1.7 million barrels more than projected a year ago, and 1 million less than the group pumped in November.

The forecast underlines the struggle faced by the Organization of Petroleum Exporting Countries as it seeks to defend market share against a surge in output from rivals such as the U.S. and Russia. While OPEC is slowly taming the expansion of competitors, the collapse in oil prices means the financial costs of its strategy are immense. Brent crude futures touched an 11-year low of $36.04 a barrel on Dec. 21.

“Although lower oil prices continue to foster some demand growth, their impact seems to be limited by other factors,” the group said. “The removal of subsidies and price controls on petroleum products in some countries and ongoing efficiency improvements will all likely continue restricting oil demand growth.”

David Fuller's view

No disrespect to OPEC but I am not sure that long-term forecasts for oil prices are worth the paper (or the PDF) they are printed on.  Remember ‘Peak Oil’?  This myth is over 200 years old.  It also fooled everyone for a while, during the height of OPEC’s temporary control, before being swept away by technology.    

There are two market adages which we should never forget.

The first of these: The cure for high prices is high prices, should never be forgotten during euphoric, not to mention bubble conditions. 

The second: The cure for low prices is low prices, is often helpful, although not so reliable as its high price predecessor.  Some products or commodities become redundant and lose their value.  Buggy whips, for instance, or a toxic commodity which can eventually be replaced by something less harmful.

Interestingly, Morgan Stanley oil analysts do not think that low prices will lead to a recovery by crude oil in 2016.  I think that depends on Saudi Arabia.  The Kingdom is hoping that US shale production will soon be squeezed out but it has been far more resilient than they expected.  Time also works against the Saudis who are burning through their reserves.  If/when they cut production, the oil price will rebound.  Meanwhile, traders are heavily short Brent and WTI crude, and susceptible to a squeeze.