Demand for oil to drop

Growing Energy Needs Met by Renewables and Gas

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

"Even after some modest reductions to growth, non-OPEC production will follow this year's 700,000-bpd growth with 1.4 million bpd of additional production in 2018 and next year's demand growth will struggle to match this", the IEA said. 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.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.

Increased oil production from countries not in the OPEC cartel had helped push global output higher in October, the report said.

"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the USA becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report. "This is why, absent any geopolitical premium, we may not have seen a "new normal" for oil prices".

OPEC also says that OPEC said inventories in developed economies declined by 23.6 million barrels in September to 2.985 billion barrels, to just 154 million barrels above the five-year average.

"While other major companies continue to maintain a presence in oil sands operations, it remains an open question whether the exit of these companies will impact prospects for oil sands development over the longer term", the IEA said.

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"Using a scenario whereby current levels of OPEC production are maintained, the oil market faces a hard challenge in 1Q18 with supply expected to exceed demand by 600,000 bpd followed by another, smaller, surplus of 200,000 bpd in 2Q18", the agency said.

The Paris-based group said it cut its demand outlook for next year by 190,000 barrels a day, and global production could vault above demand by 600,000 barrels a day in the first quarter of 2018, and by 200,000 barrels a day in the second quarter.

A study by Bank of America Merrill Lynch forecasts that pure electric vehicles would achieve a global penetration of 12 per cent in 2025, 34 per cent by 2030 and 90 per cent by 2050.

Also weighing on the oil price, is the increasing prospect of a slower pace of economic growth in China.

It seems that OPEC and the International Energy Agency live in different worlds when it comes to projecting future energy demand.

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