HOUSTON – The world’s foremost seers of future oil prices are adjusting their calculations to include this year’s brutal cost-cutting in North America’s shale plays.
In a forecast Tuesday, the Paris-based International Energy Agency said upstream budget cuts and a shrinking number of active U.S. land rigs could bolster the price of oil by inciting greater global demand and choking off the rapid expansion of crude supplies in North America and elsewhere outside the Organization of the Petroleum Exporting Countries.
These oil fields from Texas to North Dakota have been the biggest sources of a global glut in crude supplies, which has cut petroleum prices in half since June.
“Barring any unexpected supply disruption or major, energy-related change in policy, the market rebalancing will likely occur relatively swiftly,” the IEA said.
But the resurgence, the agency with 29 oil-importing member countries said, “will be comparatively limited in scope, with prices stabilizing at levels higher than recent lows but substantially below the highs of the last three years.”
The IEA’s medium-term forecast comes a day after OPEC cut its forecast for U.S. oil production by 130,000 barrels a day, citing the rapid decline in drilling activity across the nation. Analysts say domestic production could fall in 2016.
U.S. oil has climbed around $5 a barrel in the past two weeks as hundreds of domestic drilling rigs have gone idle and U.S. producers have announced tens of billions in budget cuts.