OPEC is cutting forecasts for global oil-supply growth in 2015 as U.S. producers lead a slowdown in drilling after last year’s price collapse.
Bloomberg reports the Organization of Petroleum Exporting Countries lowered its estimate for non-OPEC supply growth by about 400,000 barrels a day, led by a reduction of 130,000 a day in the U.S. Estimates for Colombia, Canada and Yemen were also trimmed. The group says it may boost global demand forecasts beyond this month’s slight increase amid rising U.S. gasoline use.
Oil has rebounded more than 20% in the past two weeks in London as a seven-month price slump pressured U.S. drillers to idle rigs and companies from Royal Dutch Shell to Chevron to curb spending plans. U.S. oil explorers have cut the number of rigs in operation to the lowest in three years, data from Baker Hughes Inc. indicated on Friday.
“The main factors for the lower growth prediction in 2015 are price expectations, a declining number of active rigs in North America, a decrease in drilling permits in the U.S. and a reduction in the 2015 spending plans of international oil companies,” OPEC’s Vienna-based research department says in its monthly market report, released this morning.
U.S. oil supply will increase 820,000 barrels a day in 2015 to 13.64 million a day—about half the gain recorded in 2014—according to the report. The estimate for total non-OPEC supply growth in 2015 was cut by 420,000 to 850,000 a day, with Colombia accounting for the second-biggest reduction after the U.S. Non-OPEC supply will still expand to 57.09 million barrels a day in 2015.
While the organization increased estimates for the amount of crude it will need to provide this year, as a result of weaker non-OPEC growth, the 29.2 million barrels a day required remains about 1 million a day below its current output. Read the full story.
