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India to drive energy demand growth: IEA
July 21 2018, 12:14 | Alonzo Simpson
International Gas Union Reaction to the IEA World Energy Outlook 2017
Some ministers for the Organization of Petroleum Exporting Countries said an extension of an agreement that sidelines about 2 percent of the total global demand for oil in an effort to balance the market was necessary next year.
Natural gas use will grow quickly, by 40 percent by 2040.
"Many commentators say we are writing the obituary for oil demand".
Under the IEA's New Policies Scenario, based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise toward $83 a barrel by the mid-2020s.
"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 report from the Paris-based International Energy Agency also predicts that solar power will become the cheapest source of new electricity generation and that the boom years for coal are over.
The US government said on Monday US shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.
According to the IEA, China overtakes the United States as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day in 2040.
First, the world's energy demand will rise the equivalent of China and India's current energy consumption over the next three decades - but Canada has limited direct conduits to connect those energy-hungry markets to its store of the world's third-largest oil reserves.
Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.
"Prices ... are starting to look like a pause or pullback is needed", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
"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.
Besides oil barrel prices, the estimate factors in the milder temperatures as winter begins in the Northern Hemisphere.
In fact, the monthly report published by IEA on Tuesday would back that theory up as it lowered its crude demand forecast for the whole of 2017 and 2018, by 50,000 bbl/day and 190,000 bbl/day respectively.
Overall global energy needs are seen rising more slowly than in the past, but are still projected to expand by 30 per cent between today and 2040.