On Monday the Organization of the Petroleum Exporting Countries announced demand for its own oil will rise in 2015 amid a slowdown in the US oil industry, in a sign that the cartel’s policy of maintaining output despite the steep fall in crude prices since last summer appeared to be working.
The closely watched report will be seen as a vindication of Opec’s contentious decision last year not to cut production despite the sharp drop in oil prices, says Financial Times.
The group said it was
raising its forecast for 2015 demand for its own oil by 400,000 barrels a
day to 29.2m b/d.
US oil supply will increase by 820,000 b/d in 2015 year on year to 13.64m b/d. That is roughly half the increase it recorded last year.
Total non-OPEC supply was forecast to grow by 850,000 b/d this year,
which represented a 420,000 b/d downward revision from the group’s last
monthly report, says Financial Times.
OPEC
said factors behind the decision to lower its forecast for non-OPEC oil
production growth were “price expectations, a declining number of
active rigs in North America, a decrease in drilling permits in the US
and a reduction in the 2015 spending plans of international oil
companies”.
OPEC
believes that the hurricane of spending cuts and project
deferrals announced by big oil companies in the past few months should
bring oil supply and demand back into balance and boost prices.
The news pushed oil prices higher. Global benchmark Brent crude oil for March
was up 35 cents at $58.15 a barrel by 1305 GMT (08:00 a.m. EST) after
rising as high as $59.06 earlier in the session.
U.S. crude was up 75 cents at $52.44 a barrel, having hit a session high of $53.40, as Reuters reported.
Brent rose more than 9 percent last week, its biggest weekly rise since February 2011. The North Sea oil futures contract has climbed almost 30 percent since hitting a five-year low of $45.19 in January.
According to analysts, signs of an economic slowdown in China were unlikely to hamper the price recovery.
