US oil producers appear to have lost their battle with OPEC (Organization of the Petroleum Exporting Countries) over market share, but the war is only just beginning, the International Energy Agency (IEA) warned Wednesday. "In the supposed standoff between OPEC and US light tight oil (LTO), LTO appears to have blinked," the Paris-based energy think tank said in its new monthly report.
"Following months of cost cutting and a 60 percent plunge in the US rig count, the relentless rise in US supply seems to be finally abating."
The price of oil has collapsed from near $120 a barrel in June last year to lows of around $45 a barrel in January, although it has since bounced back to around the $60-a-barrel level.
US oil producers appear to have lost their battle with OPEC over market share, but the war is only just beginning, the International Energy Agency (IEA) warned Wednesday.
"In the supposed standoff between OPEC and US LTO, the latter appears to have blinked," the Paris-based energy think tank said in its new monthly report.
"Following months of cost cutting and a 60 percent plunge in the US rig count, the relentless rise in US supply seems to be finally abating."
The price of oil has collapsed from near $120 a barrel in June last year to lows of around $45 a barrel in January, although it has since bounced back to around the $60-a-barrel level.
This dramatic fall in prices was due to weak demand, a strong dollar and booming US oil production, according to IEA.
However, OPEC's reluctance to cut output has also been seen as a key reason behind the fall. This has led some analysts to argue that the rivals have been playing a "game of chicken" over the price of oil before cutting back to ease the oversupply.
And US shale producers appear to succumbed to the pressure. Over recent months, the producers have been busy dialing back their operations and research firm Baker Hughes reported Friday that the US oil rig count had fallen for the 22nd consecutive week.
But the IEA stated Wednesday that far from winning the "battle," it had only just begun for OPEC.
The IEA on Wednesday kept its 2015 forecast for global oil demand growth unchanged at an average of 93.60 million b/d (barrels per day).
It also said that global oil supply growth remained at a steep 3.2 million b/d year-on-year in April, adding that total oil supplies were flat from March as higher OPEC output had offset a drop in non-OPEC supply.
It predicted that supply growth for 2015 from non-OPEC producers would be 830,000 b/d, up by 200,000 b/d since last month's report.
