Crude oil at $60/bbl not the 'new normal' - IEA

Posted November 15, 2017

Add to that China's increasing stockpiling for internal use and demand for oil could slow more than expected.

"I think this group of committed and responsible producers came together. and I think they will continue to do what it takes to take us to the next level", he said at an global oil conference.

Under the IEA's New Policies Scenario, based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise toward $83 a barrel by the mid-2020s.

This sentiment comes in part on the back of rising USA oil output, which has grown by more than 14 percent since mid-2016 to a record 9.62 million bpd.

"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the USA becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report.

"It's quite spectacular, because you're going to see the number of cars on the road globally double from 1 billion to 2 billion, thanks to electric vehicles and fuel economy standards", said Laura Cozzi, head of the Energy Demand Outlook division.

The Paris-based IEA revised demand growth down by 100,000 barrels per day (bpd) for both 2017 and 2018, for an increase of around 1.5m bpd this year, to 97.7m bpd, and 1.3m next, to 98.9m bpd, which could push the market back into a surplus in the first half of next year.

The U.S. shale surge could also mean an era of lower-for-longer oil prices.

The International Energy Agency said the oil industry's hopes for a higher, stable crude prices trading between $50 to $60 a barrel could be dashed soon if the supply disruptions and geopolitical tensions pushing prices upward prove temporary. This latest move comes as investors expect figures to show USA oil production has risen.

The largest disruptive force to supply will be shale production in the United States - the IEA estimates USA crude oil will reach peak output in the 2020s of around 17m bpd.

The International Energy Agency on Tuesday delivered a more cautious outlook for oil demand.

"Over the same period, United States gas companies ramped up their exports to Canada and Mexico, pushing net U.S. imports of pipeline gas down to around 25 bcm in 2016, compared with 80 bcm some ten years earlier", IEA economists said.

Between 2017 and 2040 the IEA estimates that more solar power capacity will be added globally each year than any other source of energy, with an annual average increase of almost 70 gigawatts.