OPEC says cheap oil taking longer to subdue rival suppliers

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LONDON, (Reuters) – OPEC on Tuesday raised its forecast of oil supplies from non-member countries in 2015, a sign that crude’s price collapse is taking longer than expected to hit US shale drillers and other competing sources.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast no extra demand for its crude oil this year despite faster global growth in consumption, because of higher-than-expected production from the United States and other countries outside the group.
Oil is trading below $50 a barrel, close to its 2015 low after an 18 percent drop in July. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC’s prior policy of keeping prices near $100.
Earlier this year, OPEC slashed its prediction of non-OPEC supply for 2015, expecting lower prices to prompt a slowdown. But on Tuesday, it raised the forecast by about 90,000 barrels per day (bpd), following a 220,000-bpd increase in last month’s report.
“US onshore production from unconventional sources is currently expected to decline marginally in the second half of 2015 through year-end, while U.S. offshore production is expected to grow due to project start-ups,” OPEC said.
“Recent developments in the upstream as well as renewed oil price volatility have made forecasting non-OPEC supply more challenging.”
US energy companies have been adding drilling rigs in recent weeks despite the price drop, and OPEC in the report raised its forecast of U.S. output in 2015 by 20,000 bpd. In March, OPEC was expecting a fall in production possibly by late 2015 as drilling subsided.
“OPEC is starting to recognise the resilience of U.S. shale,” said Jamie Webster, analyst at IHS in Washington and an OPEC expert.
Oil prices fell after the report was released, extending an earlier drop. …Read More

Source:: PM Newspaper