Investment in oil production will fall by US$100 billion, or 15%, this year compared with 2014, Fatih Birol, chief economist at the IEA, said Jan. 21 at the World Economic Forum in Davos, Switzerland. This means oil at US$45 a barrel will be a temporary phenomenon, he said.

Brent crude for March settlement rose as high as US$49.29 on the ICE Futures Europe exchange in London, and was trading at US$48.48 at 2:35 p.m. local time. West Texas Intermediate, the main U.S. grade, advanced as much as 1.1% to US$46.11 on the New York Mercantile Exchange, before falling to US$45.43.

U.S. crude production rose to 9.19 million barrels a day on Jan. 9, the fastest pace in three decades, according to the Energy Information Administration, the Energy Department’s statistical arm. The boom was driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota.

Drilling Rigs

As prices slumped, oil drillers have reduced the number of rigs operating in the U.S. to the lowest in two years, according to data from Baker Hughes Inc. Jan. 23. Companies idled 49 U.S. oil rigs last week, bringing the total to 1,317 in the seventh weekly decline, it said.

“The current price cannot sustain non-OPEC supply where it was going the last year or so,” Robert Campbell, head of oil products research at London-based Energy Aspects Ltd., said by phone from New York. “This is not just U.S. shale, this is all sorts of places: North Sea, Russia.”

Most projects to develop oil resources in OPEC members will proceed at current prices, although some may be canceled, El- Badri said.

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