Oil price drops more than US$1on IEA warning of shrinking demand

Oil price drops more than US$1on IEA warning of shrinking demand

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 also predicts that wind power will become the leading source of electricity generation in the European Union shortly after 2030.

But that's where the good news ends for the Canadian oilpatch.

"While other major companies continue to maintain a presence in oil sands operations, it remains an open question whether the exit of these companies will impact prospects for oil sands development over the longer term", the IEA said.

The IEA said planned and unplanned disruptions from OPEC may be offset elsewhere, however.

"It's quite spectacular, because you're going to see the number of cars on the road double from one billion to 2 billion, thanks to electric vehicles and fuel economy standards", said Laura Cozzi, head of the Energy Demand Outlook division.

While the USA exported 100 billion cubic metres of Canadian gas in 2005, that figure fell by over a fifth in 2016.

Myllyvirta said worldwide targets to curb global warming and reduce deaths from air pollution nevertheless require a greater commitment to renewable energy sources.

Compliance by the group with its joint 1.8-million-bpd output cut with 10 partners was 96 percent in October, the highest since the supply-reduction deal took effect in January.

Overall global energy needs are seen rising more slowly than in the past, but are still projected to expand by 30 per cent between today and 2040.

The less-than-bullish forecast for Canadian oil and gas, means the IEA has cut the country's investment spend in the country to US$1.08 trillion in 2040 (from US$1.68 trillion in its forecast last year) - part of a global cut in investment projections.

"The U.S. [shale] oil industry avoided the blow by morphing into a leaner, more agile version of its former self; it has since proved remarkably resilient to lower prices", the IEA said.

After an upbeat performance last week, oil prices edged lower for a second day Tuesday.

Production fell by 470,000 barrels a day compared with October 2016 as OPEC supply fell sharply - 80,000 barrels per day - and total cartel output of 32.53 million barrels a day was 830,000 barrels a day less than a year ago.