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.
According to the IEA's latest World Energy Outlook 2017, it's far too early "to write the obituary of oil". It kept its estimate for this year at 3.08 million bpd. 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 United States shale oil and gas output.
Oil prices held largely steady on Tuesday as the prospect of further rises in USA output offset some of the optimism that OPEC-led production cuts would tighten the balance between crude supply and demand. Besides oil barrel prices, the estimate factors in the milder temperatures as winter begins in the Northern Hemisphere.
The report says that global energy demand is expected to grow 30 percent by 2040 and that demand for oil is not expected to peak until 2040.
The largest disruptive force to supply will be shale production in the U.S. - the IEA estimates USA crude oil will reach peak output in the 2020s of around 17m bpd.More news: Mattel's hijab-wearing Barbie replica of Olympian Ibtihaj Muhammad has arrived
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.
"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 worldwide oil conference. Scientists just this week said that emissions of the heat-trapping gas rose this year after three years of not growing.
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.
Also weighing on the oil price, is the increasing prospect of a slower pace of economic growth in China.
"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.