The Organization of Petroleum Exporting Countries said it expects weaker demand for its crude this year and predicted that slumping prices will curb growth in U.S. supply.
Demand for OPEC oil will average 28.8 million barrels a day, about 100,000 barrels less than forecast last month, the Vienna-based organization said in a monthly report. While the group boosted its 2015 estimate for U.S. oil production, it said annual growth will be slower than previously estimated as lower prices lead to investment cuts and less drilling. Iraq’s output extended gains from its highest level since 1978.
“They’re trying to send a message that lower oil prices will have an impact on the market but I don’t think the numbers are necessarily reflecting that,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said by phone from London. “They do talk about U.S. production being impacted, but they don’t really do much with it.”
Oil prices collapsed about 60% from last year’s peak as OPEC seeks to maintain its market share against the fastest U.S. production in more than three decades. The group decided on Nov. 27 to keep output elevated in the face of a global surplus, testing the ability of U.S. companies to keep drilling as prices slump.
Output from its 12 members increased by 140,000 barrels a day in December, led by a jump of 285,100 a day in Iraq. That pushed the group’s output to 30.2 million barrels a day in December, or about 2.4 million a day more than the average level required in the first quarter. The amount of crude needed from OPEC in 2015 as a whole will be the lowest since 2003, its data show.
The group’s share of the global oil market will contract this year to 31.2% from 31.9% last year. The December report had showed their share contracting in 2015 to 31.3% from 32.3 in 2014.
OPEC boosted its forecast for U.S. oil production in 2015 to 13.81 million barrels a day, from 13.72 million in last month’s report. Still, estimates for the country’s annual supply growth are lower, at 950,000 barrels a day compared with 1.05 million a day.