The Organization of Petroleum Exporting Countries (OPEC) has stressed that despite the challenges facing the oil market in recent months and the sharp wave of falling prices, optimism about the future of the world's crude oil industry remains solid.
A recent report by the Organization said that this optimism paves the way for an increase in international oil investments next year and in the coming years.
The report said, "Many of the investment increases occur in US land projects led by shale oil companies, which this year raised budgets by 15 per cent to 20 per cent because of high prices, which peaked last October."
The report pointed to a good increase in investment levels in high quality marine areas, where the economics of these types of projects are still particularly competitive with regard to the United States narrow oil production.
The OPEC report said that low oil prices are not in the interest of investment, as it is the biggest concern that worries the producing countries, which seeks to continue pumping the levels of supply appropriate to the market.
It pointed out that the decline in prices had led to a decline in investment in 2015 and 2016 by about 345 billion dollars, which was an unprecedented contraction.
The report noted that the price declines led to a significant reduction in spending on upstream projects.
It is expected the decline of US drilling activity in the event of continued decline in prices due to higher production costs.
Low prices in 2016 led to a sharp drop in spending on North American upstream projects, the report said, as investments between 2014 and 2016 lost about $ 180 billion, or 60 per cent due to the decline in investments in the oil shale oil sector.
The report said, "Short-term oil investments can adapt more quickly to changing market conditions than traditional oil production."
The report pointed out that until 2017, the crude oil industry suffered this large recession in spending.
It pointed to the expectation of many analysts in the crude oil industry that the continued decline in spending could cause a shortage of supplies of crude oil, a problematic looming by early 2020.
The report said the crude oil industry will feel the full impact of the decisions taken during the downturn included in the reduction or suspension of investments in the next few years.
It pointed to the importance of working to promote the return of stability to the market along with continuing to raise levels of efficiency and reduce project costs and enhance productivity.
The report said, "Investments in the shale oil sector have grown by 18 per cent from traditional land fields."
It is expected to increase investments by 5 percent in the new year, whether from land projects or deep-water projects.
The report said output from the North Sea region in Europe has fallen, which has fallen by almost 50 per cent over two years.
It pointed out that in return there was a large flow of oil supplies destined for the Asian markets of the Gulf Coast exports in the United States, while US imports from the Middle East and Venezuela continued to decline.
The international report said the continued surge in US production helped US crude exports expand in Europe and Asia, reaching their highest levels ever.
It considered the growth of investment is the only guarantor to reach a better future for the crude oil industry.
The report confirmed that after the collapse of prices in mid-2014, the upstream projects had a sharp decline, where it decreased by 24 per cent annually over a two-year period.
Oil and gas investments in the upstream sector continued to decline in 2016, down 26 per cent to $ 434 billion.
The report pointed to growing concerns over the growth of potential global demand for oil as well as other concerns about the global oil supply, leading to a deepening of uncertainty in the market.
The report said that the daily volume of futures contracts in crude oil markets were amounted to two million futures contracts on average or about 2 billion barrels per day, according to the data for the month of October 2018.
With regard to prices at the end of last week, oil prices stabilized yesterday at the close of a week of market volatility near the end of 2018, with support from the rise in US equity markets but still under pressure from concern over an oversupply of crude.
Brent crude futures ended the day at $ 52.20 a barrel, after falling from a session high of $ 53.80.
US benchmark WTI futures rose 72 cents to settle at $ 45.33 a barrel, after reaching earlier in the session to $ 46.22 a barrel.
The benchmark indexes had the third consecutive weekly decline, with Brent down about 3 percent, while US crude fell about 0.4 percent.
Traders said, "Crude prices rose yesterday, which were supported by gains for US stocks."
Oil prices have largely followed the footsteps of Wall Street and both asset classes have seen volatile sessions throughout the week.
Earlier this week oil prices plunged to their lowest level in a year and a half, as the end of the year is heading for more than 20 per cent losses, partly affected by increased supply.
On the other hand, US energy companies added oil rigs for the second week in a row, although crude prices fell to a one-and-a-half year low and are heading towards ending the year on losses of more than 20 per cent.
Baker Hughes Energy Services said yesterday in its closely monitored weekly report, "The drilling companies added two diggers in the week ending December 28, which is bringing the total number of rigs to 885."
During the month, the number of rigs decreased by two, as the first decline in six months.
But it increased by 22 in the fourth quarter, the fourth consecutive quarterly increase.
The number of rigs throughout the year increased by 138, compared with an increase of 222 in 2017 and a decrease of 11 in 2016.
The number of oil drilling active in America, a preliminary indicator of future production, is higher than a year ago when 747 diggers were on the rise after energy companies increased spending to take advantage of higher prices.
Since the beginning of the year, the total number of active oil and gas rigs in the United States has averaged 1,031, which is heading towards the end of the year at the highest level since 2014 when it recorded an average of 1862 diggers.
Most of the excavators produce both oil and gas.
