USA oil and gas 'resurgence' expected as global demand grows

USA oil and gas 'resurgence' expected as global demand grows

USA oil and gas 'resurgence' expected as global demand grows

"Using a scenario whereby current levels of Opec [Organisation of the Petroleum Exporting Countries] production are maintained, the oil market faces a hard challenge in 1Q18 with supply expected to exceed demand by 0.6m bpd followed by another, smaller, surplus of 0.2m bpd in 2Q18". "This is a continuation of the strong demand growth we are seeing in our short term oil market analysis", the report said.

The report from the Paris-based agency will come as grim news for officials attending global climate talks in Bonn, Germany, as they grapple with ways to contain carbon emissions.

Oil prices held largely steady on Tuesday as the prospect of further rises in USA output offset some of the optimism that OPEC-led production cuts would tighten the balance between crude supply and demand.

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 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.

The US government said on Monday US shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd. But stringent fuel-efficiency measures for cars and trucks, and a shift that sees one-in-four cars being electric by 2040, mean that China is no longer the main driving force behind global oil use - demand growth is larger in India post-2025.

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"Over the same period, U.S. gas companies ramped up their exports to Canada and Mexico, pushing net USA imports of pipeline gas down to around 25 bcm in 2016, compared with 80 bcm some ten years earlier", IEA economists said.

Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.

The IEA also revised down its 2018 oil demand forecast for Brazil from 3.15 million bpd to 3.13 million bpd.

Chris Watling, CEO and chief market strategist at Longview Economics, was quoted as saying that the adoption of EVs could lead to global peak oil demand as soon as 2023, which will result in oil prices crashing to $10.

Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.

"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.

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