Oil Market Report released for May
According to the International Energy Agency's report for June, the volume of global oil supplies decreased by 155,000 barrels per day, settling at 96 million barrels per day in May.
The decrease occurred despite the Organization of Petroleum Exporting Countries having increased its supply in May to 31.33 million barrels per day, the highest volume produced since August 2012.
"IEA changed the estimated growth for demand to 1.7 million barrels per day."
Demand for oil revised
IEA changed the estimated growth for demand to 1.7 million barrels per day for the first quarter. This was an unexpectedly stronger demand than initially anticipated. In addition, the total forecast demand for 2015 is 1.4 million barrels per day.
According to The Wall Street Journal, many IEA experts emphasized the importance of this forecast jump in demand.
"Low oil prices and economic growth have helped drive up consumer demand for energy across the world in 2015, the International Energy Agency said Thursday, a phenomenon seen from U.S. gasoline stations to Chinese auto dealerships," noted the Wall Street Journal.
The U.S.'s demand for gasoline grew 4.2 percent, and the IEA suggested this was driven by a 3.9 percent increase in the miles driven by individuals across the nation.
As demand rises, the need for gas fracking will likely increase as well. It will also be a key factor in the rebalancing of oil industry.
Drilling expected to remain strong
The U.S. Energy Information Administration's Short-Term Energy Outlook indicated production should continue drilling for high volumes of oil.
"U.S. oil production since mid-2014 has been more resilient to lower crude prices than many had expected," the agency's administrator, Adam Sieminski, noted in a statement, published in USA Today. "Despite the large decline in crude oil prices since June 2014, this May's estimated oil output in the United States is the highest for any month since 1972, but production still is expected to decline in the second half of this year."
Efficiency is becoming a priority among drillers, noted USA Today. Eliminating rigs that do not produce as much oil and focusing energy and resources on sites that are currently demonstrating more success will help strengthen producers. The logistics associated with fracking will also likely need to be re-assessed.
Fortunately, most producers can still make a profit when drilling due to the current and forecast price of barrels.
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