Escolar Documentos
Profissional Documentos
Cultura Documentos
Subject:
Date:
To:
Former IEA chief: Oil will stay below $100 until 2020 because of U.S.
shale boom
Posted on October 13, 2015 | By Bloomberg | http://bit.ly/FuelFix13Oct15
Oil prices wont rebound to $100 a barrel before 2020 to 2025, when U.S. shale production will gradually start to decline, according to
a former head of the International Energy Agency.
Demand for crude in China, India, Southeast Asia and Africa will drive up global prices in the long term, Nobuo Tanaka, who served
for four years as the IEAs executive director, said in an interview in Abu Dhabi. Tanaka left the IEA, an advisory body to the worlds
industrialized nations, in September 2011 and currently works as a professor at the University of Tokyo School of Public Policy.
Price will not go up to a hundred as easily as before, Tanaka said. The shale production in the U.S. will gradually slow down after
2020 or 2025, so again theres a chance of higher prices coming after that.
Brent crude, a global pricing benchmark, dropped 44 percent in the last 12 months and was 20 cents higher at $50.06 a barrel on
Tuesday in London at 12:01 p.m. local time. The Organization of Petroleum Exporting Countries, led by Saudi Arabia, decided on June
5 to keep its crude production target unchanged to force higher-cost producers such as U.S. shale companies to cut back. The
producer group has exceeded its target for 16 consecutive months, data compiled by Bloomberg show.
Built-In Stabilizer
Shale production is a built-in stabilizer, Tanaka said. OPEC used to manage the production to stabilize the price; that was the regime
before but now when OPEC gave up this kind of function, now the shale oil is acting in the market as a built-in stabilizer. These are new
dynamics of the market.
The gap between crude oil supply and demand will continue until the end of the year, and a supply shortfall may develop in the third or
fourth quarter of 2016, he said. Until that time, if the current situation continues, the price will stay as low as the current one.
Iran, the fifth-largest producer in OPEC, is preparing to bounce back from economic sanctions that choked o investment in its oil
industry. The nation could boost output to 3.6 million barrels a day from its current 2.9 million in six months, the Paris-based IEA said in
in its monthly report Tuesday.
Iran has said it will increase oil exports by 500,000 barrels a day within six months of the lifting of sanctions and then double that
increase to 1 million barrels daily. Certainly that eases the market situation and means the oversupply will continue, Tanaka said.
http://fuelfix.com/blog/2015/10/13/former-iea-chief-oil-will-stay-below-100-until-2020-because-of-u-s-shale-boom/#35602101=5
While supplies outside OPEC will decline in 2016 in response to lower prices, demand growth will ease from this years five-year high
amid a weaker outlook for the world economy, allowing the crude surplus to endure, the IEA predicted. Iran could swell the glut if
restrictions on its sales are removed with the completion of a nuclear accord, while Iraq has replaced the U.S. as the biggest source of
new supplies as its output reaches record levels.
The market may be off balance for a while longer, the Paris-based adviser to 29 nations said in its monthly report. A projected marked
slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels -- should international sanctions be eased
-- are likely to keep the market oversupplied through 2016.
Oil rallied above $50 a barrel in New York last week for the first time since July amid expectations that a slump in U.S. drilling and
cutbacks in investment will help whittle away the global supply glut. The advance has stalled as OPEC members boost production,
Chinas economy shows signs of slowing and U.S. oil output remains elevated.
Global demand growth will revert to long-term trend levels of 1.2 million barrels a day in 2016, down from 1.8 million this year, amid a
softer economic outlook for oil producers such as Canada, Brazil, Venezuela, Russia and Saudi Arabia. Consumption worldwide will
average 95.7 million barrels a day next year, about 100,000 a day less than projected in last months report.
The demand outlook for 2016 looks markedly softer because of downgrades to the macroeconomic outlook and expectations that
crude oil prices will not repeat the heavy declines seen in 2015, according to the report.
Oil prices pared gains after the report, sinking to a one-week low of $46.60 a barrel in New York.
Iran, which plans to revive exports if an agreement on its nuclear program with world powers is completed, could boost output to 3.6
million barrels a day from its current 2.9 million, the agency estimated. This could be added in six months and almost double the
increase in oil inventories projected for next year, the IEA said.
Iraq Supply
Record output from Iraq pushed supplies from the Organization of Petroleum Exporting Countries higher in September, according to the
report. The Middle East nation raised production by 130,000 barrels a day to 4.3 million. Still, severe budgetary strain and ongoing
issues with security and infrastructure are likely to limit supply growth in the near term, the IEA said.
Output from OPECs 12 members increased by 90,000 barrels a day to 31.72 million in September, the highest since July, according to
the report. Production from Saudi Arabia, while slightly lower than August at 10.2 million barrels a day, remained above 10 million for a
seventh straight month.
While the agency boosted estimates for 2016 non-OPEC supply, amid stronger-than-expected output from Russia, Brazil and Canada, it
will still contract sharply next year. Total supply from nations outside OPEC will decline by 500,000 barrels a day, which the IEA said
last month was the steepest drop since 1992. U.S. oil output will fall to 12.56 million barrels a day in 2016, from 12.75 million this year.
Non-OPEC supply growth is disappearing fast, the agency said. Much of the slowdown is in the U.S.
Despite signs that output will ultimately falter, global markets remain oversupplied. Oil inventories in developed nations expanded in
August by double the normal amount, leaving them 204 million barrels above the seasonal average, the IEA said.
The IEA stands out as more bearish on the outlook than OPEC and the U.S. Energy Information Administration, Jens Naervig
Pedersen, an analyst at Danske Bank A/S, said in a report. Global growth concerns should limit upside above the current range in oil
prices, he said.
http://www.bloomberg.com/news/articles/2015-10-13/oil-surplus-to-persist-in-2016-as-iea-sees-demand-growth-slowing