'Oil era is far from over,' says IEA's annual report

'Oil era is far from over,' says IEA's annual report

'Oil era is far from over,' says IEA's annual report

Investors increasingly opted not to bet on higher oil prices, following a report from the International Energy Agency showing it expects rising United States shale oil and gas production to at least be among the biggest gains in the history of the industry.

"Oil is already facing stiff competition from ever-cheaper and more environmentally friendly energy sources as traditional fossil fuel users switch to cleaner, low-carbon alternatives", IEA said in its World Energy Outlook 2018.

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.

"The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market", Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London. In its World Energy Outlook 2018, the Paris-based IEA said it had cut its longer-term oil price projections from past year, partly because of the falling cost of both renewable and conventional sources of energy, the worldwide push to tackle climate change and improve air quality and the boom in U.S. shale oil and gas output. The figure was even lower based on secondary sources rather than what the government reports, at 1.863 million bpd in October, according to Opec.

Unless OPEC agrees to cut more production, output from non-member states will leave the market in surplus and limit the rally in oil prices, the IEA said.

In what could come as grim news for officials attending global climate talks in Bonn, Germany, the IEA expects oil demand to keep rising until 2040.

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After hitting a 10-year low of less than $30 in January, down from a peak of more than $100 in mid-2014, oil prices have recently been hovering around the $55 mark.

"Next year's demand growth will struggle to match this", the IEA said.

In fact, the monthly report published by IEA on Tuesday would back that theory up as it lowered its crude demand forecast for the whole of 2017 and 2018, by 50,000 bbl/day and 190,000 bbl/day respectively.

The price of oil has risen more than 30% 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 global energy markets are in the midst of "extraordinary times", writes Fatih Birol, executive director at the International Energy Agency in its annual World Energy Outlook, launched in Paris on Tuesday.

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.

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