VIENNA, Feb. 10 (UPI) -- An uncertain price trajectory for 2016 and a sharp decline in rig activity in North America means oil production is under pressure, OPEC said.
The Organization of Petroleum Exporting Countries said output from the Americas is expected to decline by 470,000 barrels per day to average 20.5 million bpd this year. That estimate was revised lower by 20,000 bpd from the January market report.
"The oil production outlook for this region in 2016 remains uncertain since the cost of production is seen to be higher than current oil prices in most areas of the United States and Canada as well as Mexico, although the upstream industry witnessing a remarkable reduction in drilling and completion costs during 2015," the report said.
Lower crude oil prices, off about 8 percent for the year, mean energy companies have less money to spend oil exploration and production, a trend reflected loosely in lower rig counts. By OPEC's account, the onshore U.S. rig count alone is at its lowest level since 2010.
Baker Hughes, which services the exploration and production side of the industry, said its fourth quarter revenue was down about 60 percent year-on-year for North American operations alone to $1.1 billion.
For Canada, OPEC said last year's production growth was lower than expected, though oil sands development should hold steady for 2016. Mexico's oil supply is estimated to decline from last year to average 2.47 million bpd.
The oil-rich Canadian province of Alberta has moved to steer its economy away from oil as weak market conditions persist. Mexico, meanwhile, aims to produce around 3.5 million bpd by 2025, through a series of reforms that include the privatization of state-controlled oil company Pemex.