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Oil falls 2 percent on rising USA output, global demand concern

15 November, 2017, 01:39 | Author: Melinda Barton
  • Crude oil is extracted from the Monterey Shale formation near Bakersfield California

The Paris-based IEA argued that with consumption in petrochemicals and other transportation still growing, the drop in oil demand would be at a modest pace.

With big gains forecast in its output of shale oil, the United States is expected to become a net oil exporter by the mid-2020s, the IEA said, adding that the USA will account for 80 per cent of the increase in the global oil supply to 2025, which will maintain near-term downward pressure on prices.

The IEA's 2017 World Energy Outlook finds that global energy markets will be shaped by four major trends over the next three decades: The United States will become the world's leading producer of oil and natural gas; renewable energy, led by a major expansion of solar power in China and India, will experience rapid growth; the share of electricity - and electric vehicles - in the energy mix will expand; and China's continuing economic expansion will increasingly be fueled by clean energy.

Oil prices held largely steady on Tuesday as the prospect of further rises in U.S. output offset some of the optimism that OPEC-led production cuts would tighten the balance between crude supply and demand. The effort, which started in January, is credited with pulling the price of oil back from the sub-$30 per barrel range last year to two-year highs in recent sessions. "Meeting this demand would require an overall investment of around $10.5 trillion across upstream, midstream and downstream operations" Opec Secretary-General, Mohammad Barkindo, said noting that the 2017 outlook was more positive than a year ago, partly thanks to oil exporting nations' efforts to stabilise the market. The Organization of the Petroleum Exporting Countries' latest monthly data showed Venezuela reporting production of 1.955 million bpd in October, versus 2.085 million in September.

The US government said on Monday US shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd. This latest move comes as investors expect figures to show United States oil production has risen.

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

The IEA estimates that there will be 50 million electric vehicles (EVs) on the road by 2025 and 300 million by 2040, from closer to 2 million now.

Some analysts even predict that with oil demand declining as EVs set to replace conventional fuel vehicles, oil price could plunge to as low as $10 a barrel over the next six to eight years.


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