OPEC sharply raised its forecast of demand for its own oil in 2015, saying the halving in prices since June would slow production in the United States and other countries much faster than previously thought.
In a monthly report issued on Monday, the Organisation of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil will average 29.21 million barrels per day (bpd) in 2015, up 430,000 bpd from its previous figure.
OPEC slashed its forecast for the rate of growth in non-OPEC supply by 420,000 bpd from last month’s report to 850,000 bpd, partly due to a slowdown in the U.S. shale boom and lower capital investments by energy firms. It argued lower prices will also boost consumption.
“(Lower non-OPEC supply is) mainly due to announced capital expenditures cuts for 2015 on the part of international oil companies, as well as a decline in the number of active drilling rigs in the U.S. and Canada,” it said.
OPEC lowered its forecast of total U.S. oil supply in 2015 by 170,000 bpd, having already lowered it by 100,000 bpd last month. It also lowered its forecast for output in Russia by 70,000 bpd from last month and by a similar amount for Middle Eastern countries outside the group.
The group said the forecasts of lower supply were still reliant, however, on prices staying low enough in the first half of this year to slow output.
“This forecast with low growth projected for 2015, is subject to the continuation of current oil market circumstances for a period of at least six months to the end of June 2015.”
Brent crude oil prices have rallied by almost 30 per cent since hitting a post-2009 low of $45.19 a barrel on January 13, and were trading above $58 a barrel on Monday.
The market has been boosted by a sharp drop in the number of U.S. drilling rigs following the price crash from around $110 a barrel at the start of last year.
OPEC said that demand for its own oil in the second-half of this year would be marginally higher than its current output. Citing secondary sources the group said it pumped 30.15 million bpd in January, down 53,000 bpd on December.
OPEC’s largest producer Saudi Arabia, whose decision to defend its market share rather than trying to shore up the price has accelerated the price crash, told OPEC it increased output last month by 50,000 bpd in January to 9.68 million bpd.