US oil price rises

US crude jumped 2.5% to $37.03 as USA crude inventories fell by 3.6 million barrels last week to 486.7 million according to the American Petroleum Institute late Tuesday.

Speculation that global demand for OPEC oil will be lower in the next four years is fueling a debate as to whether the group's current strategy will play out as planned.

As non-OPEC supply faltered, OPEC would be there to meet demand, El- Badri said.

On Wednesday, the front-month WTI contract traded as much as 56 cents over Brent, inverting a long-standing discount following last week's signing into law a bill repealing the decades-old USA crude ban.

For the long-term, global oil demand is expected to increase by over 18 million barrels per day (mb/d) by 2040, to reach 109.8 mb/d, the report said.

Global crude production is outpacing demand following a boom in USA shale oil and after a decision by OPEC previous year not to cut production in order to defend market share.

The main figures in the report showing OPEC medium-term market share under pressure are unchanged from those in a confidential OPEC report Reuters obtained in November.

"Although lower oil prices continue to foster some demand growth, their impact seems to be limited by other factors", Opec said.

North Sea producers are on track to lift production by a stronger-than-forecast 120,000 barrels day in 2015 (see chart), the International Energy Agency said in a December report.

The world's foremost oil cartel has become more pessimistic about demand for the commodity in the years ahead, but remains upbeat on the prospects of a rally in price. Brent slumped to an 11-year low on Monday amid speculation suppliers from the Middle East to the United States will exacerbate the surplus as they fight for market share. Goldman Sachs and Citigroup analysts reiterated last week that oil could fall to $20 a barrel in 2016.

As shale gas production is more expensive, the supply of conventional oil is becoming the favourite.

"Correspondingly, nominal prices reach $80/b in 2020, rising to nearly $123/b by 2030 and more than $160/b by 2040", OPEC said. The stock has a 1-month performance of -15.51 percent and is -23.59 percent year-to-date as of the recent close.

It projected the world's total crude demand would hit 97.4-million barrels a day by the end of the decade, an increase of 500,000 barrels a day compared with its forecast from a year ago.

The general outlook for oil is for low prices to remain as production stays near record levels until operators are forced to shut down due to losses.