The FINANCIAL — OPEC said on May 12 that it continued to pump more crude into a world that has more than enough oil, but that its member nations were gaining a larger share of the global market because of rising demand for energy, according to Nasdaq.
In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said it expected more demand for its crude oil this year amid expectations of a slight increase in global consumption and static growth in supplies of non-OPEC countries such as the U.S.
The producer group expects global oil demand to grow by 1.18 million barrels a day this year, a 10,000 barrel-a-day increase from its previous forecast reflecting signs of economic improvement in Europe. It upped its forecast for demand for its own oil by 60,000 barrels a day to 29.3 million barrels a day.
The share of OPEC’s crude oil as a proportion of global production ticked higher in April to 32.8% compared with 32.6% in March.
The analysis suggests that OPEC’s move to defend its market share by maintaining high levels of production in the face of falling oil prices may be working. The controversial strategy was launched at the group’s last meeting in November as it grappled with how to handle a crash in prices caused in part by new oil production from North America.
The group’s decision rocked oil markets, which had expected OPEC to step in and play its historic role as swing producer. It sent a clear message that the group wouldn’t support oil prices at the expense of its market share.
The oil producer group is forecasting a dramatic slowdown in the growth of non-OPEC oil production in 2015 thanks to the substantial slide in oil prices since June. It expects the increase in non-OPEC crude oil output to fall from 2.17 million barrels a day in 2014 to 680,000 barrels a day this year.
“The main factors for the lower growth prediction in 2015 are low oil price expectations, the declining number of active rigs in North America, the decrease in drilling permits in the U.S. and the reduction in the 2015 spending plans of international oil companies,” OPEC said in its report.
Expectations of a slowdown in U.S. oil production have helped feed a rally in oil prices in recent weeks. Brent, the global benchmark, recently traded up about 3% at $66.84 a barrel while U.S. crude rose 2.7% to $60.82 a barrel.
OPEC itself shows no signs of cutting back with its output rising to 30.8 million barrels a day in April, comfortably above the level of demand it sees for its oil this year.