Published: Tue, November 14, 2017
Business | By Max Garcia

Demand for oil to drop

Demand for oil to drop

In a monthly report, the Paris-based body said it had revised down its demand forecasts for both this year and next by 0.1 million barrels per day (mb/d).

The price of oil has risen over 30 percent since June to a two-year high of around $57 a barrel in NY trading amid evidence of stronger economic growth around the world.

The report says that global energy demand is expected to grow 30 percent by 2040 and that demand for oil is not expected to peak until 2040.

The difference between supply and demand isn't as tight as "some would like", the IEA added.

"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 USA becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report.

"It is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keep pushing demand higher", said Birol.

Global oil supply rose by 100,000 bpd in October to 97.5m bpd on higher production from non-Opec countries, and non-Opec oil supply is expected to rise by 700,000 bpd this year and 1.4m bpd next year, led by stronger output in the US.

The benchmark report notes that with renewable energy technologies nipping at the heels of oil, natural gas and coal and a global push by policymakers to cut carbon emissions, juxtaposed with near-insatiable demand from a global population that will hit 9 billion within a few decades and the rise of the USA as the world's largest oil and gas producer, the energy sector is experiencing disruptive times.

The U.S. shale surge could also mean an era of lower-for-longer oil prices.

Growth in energy demand is half what it would have been without improvements to efficiency.

A study by Bank of America Merrill Lynch forecasts that pure electric vehicles would achieve a global penetration of 12 per cent in 2025, 34 per cent by 2030 and 90 per cent by 2050.

The report suggested that over the next two decades, the global energy system would be reshaped by four major forces: the United States as it becomes global oil and gas leader, rapid deployment of renewables, growing share of electricity in the energy mix, and China's new economic strategy taking it on a cleaner growth mode.

Two government initiatives to reduce greenhouse gas emissions, namely the carbon tax and the GHG emission limits, also "have implications for oil sands", the IEA warns.

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