In a monthly report released Thursday the Organization of Petroleum-Exporting Countries (OPEC) trimmed its
forecasts for non-OPEC oil supply growth in 2015 signaling
that its strategy of pressing its American rivals
could be working.
The 12 oil-member group also said demand for the oil it
produced would be higher than previously thought, at 29.3 million
barrels per day (mb/d).
OPEC – which includes Saudi Arabia, Iran, Libya, Nigeria and Venezuela and others as members - has become well known over the last year for its refusal to reduce production, despite plunging global oil prices amid a glut in supply.
Since June 2014, the price of benchmark Brent crude oil has fallen from a high of
$114 a barrel to trade around $62.30, but OPEC has
been seemingly content to watch the price fall without cutting
production in a bid to support prices.
As OPEC did not take any action, this was interpreted as an attempt to put pressure on the new era of shale oil producers in the U.S. and Canada – where production costs are higher.
"U.S. tight oil and Canadian oil sands output are expected to see lower growth following the recent strong declines in rig counts," the report said indicating that non-OPEC oil supply this year to grow by just 680,000 barrels per day (b/d) – down from its previous forecast of 850,000 b/d.
Undoubtedly, U.S. production appears to be slowing, as the most recent data indicated U.S. inventories had built up more slowly than expected, pushing US oil prices higher Wednesday.
According to a Reuters report, negotiations between major oil producers also triggered
speculation of production cuts, even though most analysts said these
were unlikely.
On Thursday, oil rose more than 3 percent, pushing Brent crude
to a 2015 high above $63 per barrel on increasing evidence that U.S.
production is peaking. However, after the report was released, the price fell back to $62.28.
According to OPEC, other oil producers were the ones to blame for the plunge in the oil prices, as the supply glut since June 2014 was "compounded by production increases in the U.S. and elsewhere."
The cartel, however, shows no sign of cutting production itself. Crude produced by the group increased by 810,000 b/d in March, to average 30.79 mb/d, it said, citing secondary sources.
Global oil demand growth forecast was left unchanged at 1.17 mb/d in 2015, with close to two-thirds of this growth coming from China, elsewhere in Asia and the Middle East, adding that "the most recent softening trend in the U.S. and some major emerging markets will need to be carefully monitored."
