Opec revises forecast for oil demand but sees US shale decline
US shale oil production is beginning to weaken, the Organisation of the Petroleum Exporting Countries (Opec) said yesterday as it upgraded its forecast for world oil demand in 2015 and said lower prices will spur consumption.
In its latest closely-watched market report, Opec said that global oil demand in 2015 is projected to rise by 1.17m barrels per day.
This is slightly higher than its earlier forecast, mainly to reflect expectations of an uptick in consumption in North America.
The group also said that US shale oil production had fallen amid signs that its decision to allow the price of crude to decline sharply over the last quarter was beginning to put pressure on high-cost producers.
US onshore drilling activity in parts of both emerging and mature oil production regions declined by 288 rigs from a peak of 1,551 in early October to 1,263 rigs in January, because of unattractive economic returns, said Opec.
The report said: "As prices drop, oil requirements are likely to respond positively, although this can be impacted by other factors.
"For example, in 2008, prices fell sharply starting in the summer with the onset of the financial crisis and the global economic recession, which also led to a deterioration in demand.
"This time the sharp fall in prices has been mainly driven by excess supply."
Oil prices were largely flat yesterday at around $57 per barrel after rallying hard last week amid concerns over supply.
Brent crude has added $10 in the last two weeks largely due to uncertainty over Libya.