The latest news from North America is not encouraging for the world’s major oil exporters.
The recent sharp reduction in oil rig counts in use has levelled off.
At the same time, US domestic production continues to rise while imports from Canada also are rising again.
The net result for Opec is falling demand for their crude in the US, which means the fight for market share elsewhere continues to intensify.
Last week, data from the oil services company Baker Hughes showed that oil rigs in use fell by 37 to 1,109. That is the lowest number in use since mid-2011 after an unprecedentedly sharp fall since the end of last year.
But the rate of decline in rig use has slowed and production at the largest fields in the booming US shale sector has actually increased even as more marginal field production has tailed off.
The US government’s energy information agency last week gave its outlook for domestic production this year: “Projected 2015 oil prices remain high enough to support some development drilling activity in the Bakken, Eagle Ford, Niobrara, and Permian Basin, albeit at lower levels than previously forecast. ”
The EIA said it expects production to decline in the third quarter this year, but only marginally and to then climb again, assuming oil prices have recovered in the second half of the year.
Even in Canada, which has some of the highest-cost production in the world, crude output continues to rise. The US accounts for almost all of Canada’s oil exports, but according to Canada’s National Energy Board outlook, released last week, exports to other countries are rising. At the end of last year, the first crude was exported to Europe from both Canadian and US ports, and a recent rule change in Europe lifting restrictions on crude from western Canada’s oil sands area should boost exports there.
Opec exports to the US, meanwhile, have suffered, especially those from Saudi Arabia, which according to the EIA, were down at just 814,000 bpd in the latest four-week period, compared to 1.4 million bpd last February.
amcauley@thenational.ae
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