IEA oil demand forecast scaled back
- Author: Anthony Vega Nov 15, 2017,
Nov 15, 2017, 0:24
Along with the expected demand for oil, the IEA said natural gas use is projected to increase by 45 per cent to 2040.
The IEA, meanwhile, delivered a surprisingly downbeat outlook for oil demand in its monthly market report, showing an expected slowdown in consumption that was at odds with a more bullish view from the producer group OPEC on Monday.
"Even after some modest reductions to growth, non-OPEC production will follow this year's 700,000-bpd growth with 1.4 million bpd of additional production in 2018 and next year's demand growth will struggle to match this", the IEA said.
"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the U.S. becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report. Next year, demand is seen hitting 98.9 million bpd, up 1.3 million bpd from this year.
The US government said on Monday US shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.
The U.S. shale surge could also mean an era of lower-for-longer oil prices.
Brent crude oil prices recently climbed to two-year highs of more than $60 a barrel due to supply disruptions, geopolitical concerns and a growing expectation that an Opec-led agreement to reduce production will be extended through 2018. The IEA estimates that there will be 50 million electric vehicles on the road by 2025 and 300 million by 2040, from closer to 2 million now.
The largest disruptive force to supply will be shale production in the U.S. - the IEA estimates USA crude oil will reach peak output in the 2020s of around 17m bpd.
Oil prices have risen in recent months, after both Opec and non-Opec countries struck a landmark deal at the end of past year to cut back production to combat a global oil glut.
"None of its core scenarios for the future of energy provide a reasonable chance that the world will avoid climate catastrophe", said Adam Scott, senior advisor at Oil Change International.
Christopher Kuplen, BofAML's Research Analyst, argues that since 55 per cent of global oil is consumed in transportation, of which more than half by passenger vehicles, the demand for oil would eventually fall. Scientists just this week said that emissions of the heat-trapping gas rose this year after three years of not growing.
Global energy needs will rise more slowly than in the past but still expand by 30 per cent between today and 2040, the equivalent of adding another China and India.