The Organization of Petroleum Exporting Countries on Wednesday June 10, 2015 stuck to its prediction of total oil demand of 92.5 million barrels per day in 2015, up 1.18 million barrels per day in 2014, but warned that price may remain high as a result of over-supply.
In its monthly report, the organization stated that consumption is expected to pick-up in the 2nd half of the year, following a global economic rebound.
The body said oil price rose above $60, a high for the year, due to “geopolitical turmoil” and other factors.
However, it said that “overall fundamentals still point to a well-supplied market that continues to put a ceiling on prices.”
Oil price fell to as low as $45 between January and June 2015. This was due in part to a supply glut caused by the boom in US shale oil.
But OPEC, which has traditionally defended price levels by cutting output if needed, dramatically switched strategy last November when it opted to leave production unchanged.
At its biennial production meeting last week in Vienna, OPEC stuck to it strategy of keeping output target unchanged at 30 million barrels per day.
This is an attempt to maintain market share and put pressure on US shale oil producers, which need a higher oil price to be profitable than in traditional extraction methods — a strategy that experts say has had some success.
In its report OPEC said that sustained lower oil prices “could create serious complications for oil companies, especially companies that depend on fracking and other advanced methods of production.”
“If oil prices remain low for too long, the industry will likely go through a period of consolidation,”.