Agency says not to count on crude prices staying up
The International Energy Agency said the oil industry’s hopes for stable crude prices between $50 to $60 a barrel could be dashed soon if the supply disruptions and geopolitical tensions pushing prices upward prove temporary.
U.S. oil prices have risen above $57 a barrel recently amid geopolitical tensions overseas, supply disruptions and an anticipated extension of OPEC’s production cuts next year. Bloated global petroleum inventories were reduced by 40 million barrels after Hurricane Harvey, pushing stockpile levels in wealthy nations below 3 billion barrels for the first time since 2014. But the oil market isn’t tightening as quickly as once anticipated, the agency said in its monthly oil market report.
Indeed, benchmark U.S.
crude fell $1.06, or 1.9 percent, on Tuesday to settle at $55.70 per barrel on the New York Mercantile Exchange.
The Paris-based group said it cut its demand outlook for next year by 190,000 barrels a day, and global production could vault above demand by 600,000 barrels a day in the first quarter of 2018, and by 200,000 barrels a day in the second quarter. And the agency expects non-OPEC countries to boost output by 1.4 million barrels a day next year, doubling this year’s production growth.
“Next year’s demand growth will struggle to match this,” the IEA said. “This is why, absent any geopolitical premium, we may not have seen a ‘new normal’ for oil prices.”
However, the International Energy Agency also also said Tuesday that oil will continue growing as a source of energy for over two decades, with the U.S. set to become the undisputed leader in crude and gas production. Environmental activists decried the forecasts as discounting any efforts by countries to limit emissions as part of the Paris Agreement on climate change.