OPEC cuts and Venezuelan outages offset global drilling forecast

US drilling is expected to increase
A worker waits to connect a drill bit on Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas, U.S., on Friday, Dec. 12, 2014. Of all the booming U.S. oil regions set soaring by a drilling renaissance in shale rock, the Permian and Bakken basins are among the most vulnerable to oil prices that settled at $57.81 a barrel Dec. 12. With enough crude by some counts to exceed the reserves of Saudi Arabia, they’re also the most critical to the future of the U.S. shale boom. Photographer: Brittany Sowacke/Bloomberg

OPEC’s output cuts as well as outages in Venezuala have offset projected drilling activity in 2018.

Analysts Westwood Energy expect a global increase in oil drilling activity of six percent this year, mainly driven by onshore US drilling.

However, OPEC production cuts are expected to remain high, leading to a global net undersupply of 1.3million barrels per day.

Meanwhile a political crisis in Venezuala has also affected forecasts, which has seen production drop 26% in 15 months and is expected to continue, according to Westwood.

The analysts say onshore production in the US, which has risen with the oil price, is expected to continue to grow by around 950thousand barrels per day in a “conservative” estimate.

Meanwhile, gas production will grow by 10%, according to Westwood, as exploration and production firms look to develop major resources globally, particularly in North America.