Oil prices rose, Monday after Kuwait’s oil minister said economic growth and the removal of high-cost producers would help tighten global fuel balances and OPEC forecast more demand for its oil next year.
Ali al-Omair said the Organization of the Petroleum Exporting Countries (OPEC) would stick to its output policy, which has focused on building market share at the expense of higher cost non-OPEC producers.
“There are indications that a lot of high-cost oil production is starting to get out of the market and this will help improve prices,” Omair said.
The comments followed data from Baker Hughes showing the number of U.S. rigs drilling for oil fell for a sixth consecutive week.
“Bullish rhetoric from OPEC is helping drive prices higher,” said Tamas Varga, market analyst at London brokerage PVM Oil Associates. “Rig count data is also supporting sentiment.”
Benchmark Brent crude was up 20 cents a barrel at $52.85 by 1125 GMT. U.S. light crude was up 15 cents at $49.78.
Brent fell to a six-year low just above $42 a barrel in August, down from a peak above $115 in June 2014.
Since hitting an all-time high of 1,609 a year ago, the number of U.S. rigs operating has fallen by an average of 20 a week as higher cost drillers curb costs due to low prices.
“The current rig count is pointing to U.S. production declining sequentially between 2Q15 and 4Q15 by 255,000 barrels per day,” Goldman Sachs said in response to the data.
The bank said, however, that “a rapid drawdown of the observed backlog of uncompleted wells could lead to higher production later this year and in 2016″.
OPEC forecast on Monday that demand for its oil in 2016 would be much higher than previously thought as its strategy of letting prices fall hits U.S. shale oil supplies.
In its monthly report, the Organization of the Petroleum Exporting Countries forecast the world would need 30.82 million barrels per day (bpd) from the group next year, up 510,000 bpd from its previous projection.
This should reduce the excess supply in the market and lead to higher demand for OPEC crude,” OPEC said in the report, “resulting in more balanced oil market fundamentals.”