Oil Falls Sharply on Rising US Output, Global Demand Concern

Oil Falls Sharply on Rising US Output, Global Demand Concern

The less-than-bullish forecast for Canadian oil and gas, means the IEA has cut the country's investment spend in the country to US$1.08 trillion in 2040 (from US$1.68 trillion in its forecast last year) - part of a global cut in investment projections.

Compliance by the group with its joint 1.8-million-bpd output cut with 10 partners was 96 percent in October, the highest since the supply-reduction deal took effect in January.

This sentiment comes in part on the back of rising USA oil output, which has grown by more than 14 percent since mid-2016 to a record 9.62 million barrels per day (bpd). U.S. West Texas Intermediate (WTI) crude was at $56.72 per barrel, down 4 cents.The dips came after both crude benchmarks early last week hit highs last seen in 2015, but traders said the market had lost some momentum since then."Oil is fairly calm".

Solar power will surge globally in the coming decades, but oil demand will also continue to grow, according to a new report from the International Energy Agency.

The U.S. government said on Monday U.S. shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd. However, this is expected to cut only 2.5 million barrels per day, or about 2%, off global oil demand by that time.

Arab League To Meet On Iran at Saudi Request
The move faced a serious backlash back then, including from France, which stated it would stick to the deal. This came after " its [Iran's] Houthi proxy " in Yemen fired a missile towards the Saudi capital last week.

Moreover, the revision for 2018, while "not very large" on average for the full year, came mostly on the back of lower-than-expected demand in the fourth quarter, which would come 311,000 bbl/day lower. But analysts expect the price to not rise much further in coming months as the United States ramps up production.

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.

A cooling Chinese economy also stoked some concerns about demand, although so far the country's refiners are processing crude oil near record levels of 11.89 million bpd.

Over the next two decades, the global energy system would be reshaped by four major forces: the U.S., as it becomes the 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 path.

While the IEA's base-case scenario projects oil prices reaching US$83 per barrel by 2025 and as high as US$111 by 2040, a low oil-price scenario could see prices stuck in the US$50 to US$70s if electric passenger cars take off, USA tight oil production continues to rise and upstream costs decline.

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