Oil investment revival seen; OPEC step cited

Oil companies are reviving investment, after a twoyear rout, as reduced OPEC production drives prices higher, easing the risk of oversupply, the International Energy Agency said.

There are “signs of a modest recovery” in spending in 2017 after two years of big investment cuts, the Parisbased agency said Monday in a report.

The agency doubled forecasts for production growth outside OPEC next year as U. S. shale producers emerge “leaner and fitter” from the downturn.

The Organization of the Petroleum Exporting Countries and Russia headed an agreement among 24 oil producers last year to clear a global glut, spurring a 20 percent rally in crude prices. Before that decision, OPEC had refused to reduce output on the grounds that any curbs would bail out rival producers.

“Until the agreement was struck, prices threatened to return to the levels seen in early 2016” of less than $ 30 a barrel, the agency said. “Another period of falling prices could have further pushed back critical investment decisions, and threatened the production recovery needed” at the end of the decade.

Investment will increase this year after back- to- back declines of about 25 percent lowered global investment to $ 433 billion in 2016, according to the International Energy Agency, which advises most of the world’s biggest economies on energy policy.

U. S. producers are leading the spending revival and will contribute most of the growth in supplies outside OPEC through to 2022, the agency said.

American drillers will add a total of 1.6 million barrels a day, up from the projection in last year’s report that they would add 1.3 million by 2021. U. S. drilling has expanded for a 10th month, according to the weekly count of active oil rigs by oil field services provider Baker Hughes Inc.

The outlook for Russia improved significantly, the agency said. Instead of the decline projected in last year’s report, the agency now sees the country maintaining output at 11.3 million barrels a day, near a post- Soviet record.