Saturday , November 18 2017

Oil glut set to last at least until mid-2017 – Global energy investment slides in 2015: IEA

This file photo taken on April 21, 2016 shows a self-elevating oil drilling platform in the Cromarty Firth from Invergordon, north of Inverness, in the Highlands of Scotland. A global oil glut that has hurt producers but means cheaper pump prices for consumers looks set to go on at least six months longer than previously thought, the International Energy Agency said. (AFP)
This file photo taken on April 21, 2016 shows a self-elevating oil drilling platform in the Cromarty Firth from Invergordon, north of Inverness, in the Highlands of Scotland. A global oil glut that has hurt producers but means cheaper pump prices for consumers looks set to go on at least six months longer than previously thought, the International Energy Agency said. (AFP)

PARIS, Sept 14, (AFP): A global oil glut that has hurt producers but means cheaper pump prices look set to go on at least six months longer than previously thought, the IEA said, sending world oil prices slumping.

The International Energy Agency said demand growth was slowing while supply was rising, meaning the glut was now due to linger “at least through the first half of next year”.

The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016.

The timing of the world oil market’s return to balance is “the big question”, the IEA said in its monthly report, adding that current prices — above $45 — would suggest supply falling and strong demand growth.

“However, the opposite now seems to be happening,” it said. “Demand growth is slowing and supply is rising.”

The trend may fuel speculation of a possible production freeze — aimed at supporting prices — being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month.

China and India, which had been key drivers recently of demand growth, are “wobbling”, it said, while a slowdown in the United States and economic concerns in developing countries have also contributed to the surprise development.

Global oil demand is now expected to grow by 1.3 million barrels per day (mb/d) in 2016, to 96.1 mb/d, from its original forecast of 1.4 mb/d growth.

The IEA also trimmed its demand growth forecast for 2017 by 200,000 barrels per day, to 97.3 mb/d.

On the supply side, output fell in August, led by producers outside of the Organization of the Petroleum Exporting Countries (OPEC) cartel.

After gains in June and July, global oil supplies dropped by 300,000 barrels per day last month, to 96.9 mb/d.

Non-OPEC supply is expected to rebound next year, after declining this year.

But, said the IEA, OPEC production edged up last month to a near-record supply level, which “just about offset steep non-OPEC declines”.

Producers Saudi Arabia, Kuwait, the United Arab Emirates and Iraq are all at, or near all-time highs, the report said.

“Saudi Arabia’s vigorous production has allowed it to overtake the US and become the world’s largest oil producer,” it added. The US had held the spot since April 2014.

In late 2014, OPEC shifted its strategy to defend market share, rather than price, a move which has hit high-cost non-OPEC producers especially hard.

Among them, the United States, formerly the engine of non-OPEC supply growth, has particularly suffered.

Iran, meanwhile, has been “swift” to ramp up its production after the lifting in January of years of nuclear-linked sanctions.

Production by the 14 members of OPEC rose slightly in August to 33.47 mb/d.

The IEA, which advises oil consuming nations on energy issues, said its latest data indicated that the “supply-demand dynamic may not change significantly in the coming months.”

Meanwhile, the International Energy Agency said Wednesday that global energy investment sank in 2015 on ultra-low oil prices but noted a shift towards spending on cleaner energy.

Investment in global energy projects fell eight percent last year on sliding expenditure in oil and gas upstream projects, despite robust spending in renewables, electricity networks and energy efficiency, the Paris-based IEA said in a report.

The total level of investment was $1.8 trillion (1.6 trillion euros), down from $2.0 trillion in 2014, it said in a detailed analysis of the energy sector.

The IEA added however that there was a clear move to switch away from fossil fuels and towards cleaner renewable energy.

“We see a broad shift of spending toward cleaner energy, often as a result of government policies,” said IEA Executive Director Fatih Birol in the report.

“Our report clearly shows that such government measures can work, and are key to a successful energy transition.

“But while some progress has been achieved, investors need clarity and certainty from policy makers.

China was the world’s largest energy investor last year with spending of $315 billion thanks to its efforts to build up low carbon generation and electricity networks and energy efficiency policies.

Renewable energy investments of $313 billion accounted for nearly a fifth of total spending last year, making renewables the largest source of power investment, the report found.

Check Also

Oil spots around Al-Zour power plants controlled, says official

KUWAIT CITY, Aug 14, (Agencies): Workers at the Ministry of Electricity and Water, in collaboration …

Translate »