The collapse in oil prices is starting to slow growth in U.S. output, OPEC said on Thursday, although the slowdown will not prevent demand for the exporter group’s oil falling in 2015 to its lowest in a decade.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil would drop to 28.78 million barrels per day (bpd) in 2015, down 140,000 bpd from its prior estimate and the lowest since 2004.
Oil prices have fallen almost 60 per cent since June, partly because OPEC in November decided against cutting output to retain market share against rival suppliers. The rout has put forecasts for a boom in U.S. output in the spotlight.
“The steep drop in global oil prices could endanger the marginal barrel’s output from unconventional sources,” OPEC said in the report, written by its economists at the group’s Vienna headquarters.
“As drilling subsides due to high costs and a potentially sustained low oil price, production could be expected to follow, possibly late in 2015.”
At OPEC’s meeting, top exporter Saudi Arabia urged fellow members to combat the growth in supply from competing sources including U.S. shale, which needs relatively high prices to be economic and has been eroding OPEC’s market share.
In the report, OPEC lowered its forecast of total U.S. oil supply in 2015 by 100,000 bpd to 13.81 million bpd. It still forecasts hefty U.S. supply growth of 950,000 bpd year-on-year.
OPEC is not the only oil forecaster to see a slowdown in U.S. supplies. The U.S. government said on Tuesday it expects domestic oil output in 2016 to grow by only 2.2 per cent, the slowest pace in years.
Even so, this year’s average demand for OPEC crude is expected to be the lowest since 28.15 million bpd in 2004, using the December reports published on OPEC’s website each year as a comparison.