Oil Falls Back Below $78 After OPEC Cuts Outlook

Crude oil futures have fallen back below $78 a barrel after OPEC cut its price and demand expectations in its latest World Oil Outlook.

OPEC, or the Organization of Petroleum Exporting Countries whose 12 members include Saudi Arabia, the UAE, and Venezuela, said that in 2013 dollars, oil prices are expected to remain near $110 a barrel, corresponding to a small decline in real values.

The report also expects oil prices to fall to $100 a barrel in 2013 dollars through 2035.

In its report, OPEC said that, "medium-term oil demand for the period 2013-2019 increases by an average of 1.0 mb/d annually, reaching 96.0 mb/d by 2019. Over this period, demand in all OECD regions falls with OECD aggregate demand having peaked in 2005, down to 45.2 mb/d in 2019 from 45.9 in 2013."

The report added that, "Over the period 2013-2019, total non-OPEC supply increases steadily, rising by 6.4 mb/d over these six years from 54.2 mb/d in 2013 to 60.6 mb/d in 2019. The amount of OPEC crude required will fall from just over 30 mb/d in 2013 to 28.2 mb/d in 2017, and will start to rise again in 2018. By 2019, OPEC crude supply, at 28.7 mb/d, is still lower than in 2013."

The report also says that there is a need for "capacity rationalization" for the refining sector.

"The medium-term excess in incremental refinery potential output over incremental product requirements highlights the need for a continued rationalization of the refinery sector, especially in industrialized regions where demand continues to decline," the report said.

The recent tumble in oil prices has been attributed to a number of potential factors, ranging from the end of a super-cycle in oil prices, to excess to supply, to waning demand.

Here's the chart of oil prices on Thursday morning.