Agency says not to count on crude prices stay­ing up

Houston Chronicle - - BUSINESS - By Collin Eaton

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.

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