Economy

Global crude oil demand to ease on warm climate

Global crude oil demand to ease on warm climateā€¯

LONDON-The U.S. will be a dominant force in global oil and gas markets for many years to come as the shale boom becomes the biggest supply surge in history, the International Energy Agency predicted.

"The growth in production is unprecedented, exceeding all historical records, even Saudi Arabia after production from the mega Ghawar field or Soviet gas production from the super Siberian fields", Mr Birol said.

That will keep prices down and help make the U.S. a net exporter of oil - in addition to gas - by the late 2020s.

"The US will become the undisputed global oil and gas leader for decades to come", said Fatih Birol, IEA executive director.

"I think this group of committed and responsible producers came together. and I think they will continue to do what it takes to take us to the next level", he said at an global oil conference.

The agency raised estimates for the amount of shale oil that can be technically recovered by about 30 per cent to 105 billion barrels.

The expected US surge will account for 80% of the increase in global supply over the time period.

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. The world will use just over 100 million barrels of oil a day by 2025.

The report includes several caveats: While the US will become a major exporter of light crude and refined products, it will remain a major importer of heavier crude oil that is used in many of its refineries. But the expected increase would put the USA further into uncharted territory.

Oil prices have risen in recent months, after both Opec and non-Opec countries struck a landmark deal at the end of previous year to cut back production to combat a global oil glut. The cartel, led by Middle East producers, will see its share of the market grow to 46 per cent in 2040 from 43 per cent now.

Hurricane Harvey contributed to a sharp decline in industry stocks held in developed nations grouped together in the OECD, the IEA said, adding this contributed to worldwide oil stocks seeing a quarterly decline for only the second time in the past two years.

If US production stays at current levels, the IEA said, and a trend towards adopting electric cars accelerates, prices could stay between US$50 and US$70 a barrel until 2040.

"Even with the extraordinary move to a net export position, the health of the US energy economy remains intricately linked with those of its neighbors in North America and with choices made by countries further afield", the group said.



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