Representatives of OPEC member states confirmed the group’s prior outlook for the oil market in 2015, projecting that the need for its crude will rise in the second half of the year, according to two delegates.
The Organization of Petroleum Exporting Countries’ Economic Commission Board, which reviews the market before ministers meet in Vienna next week, ratified estimates for oil supply and demand outlined in the group’s most recent monthly report, said the delegates, who asked not to be identified because the talks are private. The May report forecast demand for the group’s crude of about 30.5 million barrels a day in the second half, more than 2 million higher than the first six months of the year, but lower than current output.
Ministers from OPEC’s 12 nations will meet in Vienna on June 5 to review their production target, currently at 30 million barrels a day. All but one of 34 analysts and traders surveyed by Bloomberg last week predicted the target will be maintained as the group continues with a strategy to defend market share rather than support prices.
“The result of the next OPEC meeting will basically be no change,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “We pencil in the probability of a reaffirmation of the 30-million-barrel-a-day target.”
OPEC production climbed to 31.579 million barrels a day in May from 31.512 million last month, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabia, the group’s top producer, pumped 10.25 million barrels a day this month, unchanged from April and the most in monthly Bloomberg data going back to 1989.
OPEC’s Vienna-based Secretariat estimated the group’s April output at 30.843 million barrels a day in a report published May 12, using data compiled from external sources.
Brent crude, the international benchmark, rose 41 percent from a six-year low reached in mid-January as cuts to producers’ spending plans and a reduction in the number of active U.S. drilling rigs prompted speculation that a supply glut would diminish. Disruptions in Libya and the Saudi military intervention in Yemen also helped oil prices recover from a plunge of more than 50 percent last year. Brent climbed $2.98 to $65.56 Friday.
Saudi Arabia shaped OPEC’s strategy at the last meeting in November to defend the group’s market share, arguing that the usual response of cutting output to boost prices would not address the threat from U.S. shale and other higher-cost suppliers.
Since the slump in prices, major oil companies have cut investments worldwide by 10 percent to 15 percent, while smaller companies slashed investments by 30 percent to 40 percent, Patrick Pouyanne, chief executive officer of Total SA said April 17.
Global investment in oil production might fall by $100 billion this year, according to the International Energy Agency, which has curbed forecasts for non-OPEC supply growth to 830,000 barrels a day this year, down from a projection of 1.3 million a day in November.