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U.S. oil and gas 'resurgence' expected as global demand grows

15 November 2017

It is certainly true in the passenger vehicle segment and in power generation, but it is not true in the other two elements of oil demand: "transportation and petrochemicals". Bloated global petroleum inventories were reduced by 40 million barrels after Hurricane Harvey, pushing stockpile levels in wealthy nations below 3 billion barrels for the first time since 2014.

"The reality is that 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", it's monthly report read.

"The recent price support, namely the tension in the Middle East, has been swept aside as rising rig counts and US shale output (are) in the focus of traders", PVM Oil Associates analyst Tamas Varga said.

The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.

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According to the IEA's latest World Energy Outlook 2017, it's far too early "to write the obituary of oil".

Worldwide, oil consumption is seen reaching 97.7 million bpd in 2017, up 1.5 million bpd from 2016.

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 US government said on Monday US shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.

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After an upbeat performance last week, oil prices edged lower for a second day Tuesday. But analysts expect the price to not rise much further in coming months as the US ramps up production.

The IEA estimates that there will be 50 million electric vehicles (EVs) on the road by 2025 and 300 million by 2040, from closer to 2 million now.

"It's quite spectacular, because you're going to see the number of cars on the road double from one billion to 2 billion, thanks to electric vehicles and fuel economy standards", said Laura Cozzi, head of the Energy Demand Outlook division.

"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.

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Having said that, the IEA points out that over the next 25 years, the world's growing energy needs will be met first by renewables and natural gas "as fast-declining costs turn solar power into the cheapest source of new energy electricity generation".

U.S. oil and gas 'resurgence' expected as global demand grows