The IEA said a rapid decline in investments in exploration and production activities will lead to an average of 4.1 million barrels per day in new production from 2015 through 2021. However, it said this decline will be a short-lived one as enormous stocks could dampen any recovery pace in oil prices when the market begins to draw from these stocks, IEA said.
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“Positive sentiment on the stock market and the impact of the lower US rig count gives some support to oil prices”, said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam. Seeking additional protection against wild swings in prices, oil traders have scrambled to scoop up options, sending a key index to its highest level since the worst of the global economic crisis in 2008, data showed.
With global sanctions out of the way, the IEA report sees Iran as the other country prepared to ramp up crude production, Kallanish Energy learns. Atkinson noted the resilience of shale oil production has surprised analysts.
Daniel Holder of Schneider Electric said there was market consensus that the agreement would not affect prices, because it would not cut supplies.
“Today’s oil market conditions do not suggest that prices can recover sharply in the immediate future – unless, of course, there is a major geopolitical event”, IEA said. These hopes significantly boosted both the West Texas Intermediate (WTI) US benchmark as well as the Brent Crude worldwide benchmark for crude oil on Monday.
“There was a rise, there will be a fall, and soon there will be a rise again”, Birol said on the opening day of a huge energy-industry conference that will feature addresses by the oil minister of Saudi Arabia, the secretary-general of OPEC, the president of Mexico, and U.S. Energy Secretary Ernest Moniz.
In addition to almost 8 million b/d of new global refining capacity due to come on stream over the next five years, growing volumes of non-refining fuels mean the gap between capacity expansions and demand will rise to about 2 million b/d, according to the IEA’s latest medium-term report.
The US remains the largest contributor to supply growth during the forecast period (2017 to 2021), accounting for more than two-thirds of the net non-OPEC increase while Middle Eastern producer Iran would lead OPEC oil output gains, the IEA predicted.
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SINGAPORE – Oil futures fell more than 1% on Tuesday amid worry that rising Iranian output would deepen a global crude oversupply, offsetting the expectation of a drop in United States production that had spurred sharp price gains in the previous session. The country produces 500,000 barrels a day less in January than in the summer, according to many analysts, though other researchers disagree with that number. Indian consumption races ahead as more motorists take to the roads, while Chinese demand growth cools in tandem with the economy.
