Oil prices steady due to supply glut
The head of the International Energy Agency says he does not expect a major increase in oil prices despite the OPEC supply cut agreement.
Speaking in Delhi, Fatih Birol told Reuters he does not believe the pact to cut combined output by almost 1.8 million b/d will significantly boost crude prices because the stubborn supply glut remains.
Birol said “There is a tremendous amount of stock in the markets and to expect a major increase in the price is not very realistic” adding that other producers will force downward price pressure.
“If we see the prices go up as a result of any push from the producers … we will see more oil coming to the market, not just from the U.S.; we will also see Brazilian and Canadian oil coming to the market.”
New fracking technology in US shale production has make the world’s largest oil consumer into an exporter of crude and products. Canada continues to develop its massive oilsands deposits and Brazil is looking to its huge offshore fields to increase its production.
According to the IEA, global oil demand is expected to grow by 1.4 million b/d in 2017.
Birol was in India to announce ‘Association’ status with the IEA for the South Asian country, expanding its partnership for a more secure and sustainable energy future with the world’s third-largest energy consumer..
Reuters reports the IEA sees India as the most important driver for global energy demand growth in the future as its oil consumption is expected to rise to about 10 million b/d by 2014.