OPEC made the deepest cut to its forecasts for 2015 global oil-supply growth since it first published them in August as U.S. producers lead a slowdown in drilling after last year’s price collapse.
The Organization of Petroleum Exporting Countries lowered its estimate for non-OPEC supply growth this year by about 400,000 barrels a day, the biggest reduction since the forecast was introduced in August. The U.S. led with a cut of 130,000 barrels a day while estimates for Colombia, Canada and Yemen were also trimmed. The group said it may boost global demand forecasts beyond this month’s slight increase amid rising U.S. gasoline use.
Oil has rebounded more than 20 percent in the past two weeks in London as a seven-month price slump pressured U.S. drillers to idle rigs and companies from Royal Dutch Shell Plc to Chevron Corp. to curb spending plans. U.S. oil explorers have cut the number of rigs in operation to the lowest in three years, according to data from Baker Hughes Inc.
“The main factors for the lower growth prediction in 2015 are price expectations, a declining number of active rigs in North America, a decrease in drilling permits in the U.S. and a reduction in the 2015 spending plans of international oil companies,” OPEC’s Vienna-based research department said in its monthly market report.
Oil extended gains following the OPEC report. Brent crude climbed as much as 2.2 percent, or $1.26, to $59.06 a barrel on the ICE Futures Europe exchange in London. The international benchmark capped its biggest two-week gain in 17 years on Feb. 6 on speculation that a reduction in U.S. drilling would curb production growth.