Crude Oil Rises after OPEC Says Market to be Balanced in 2016

“The longer the oil price remains low, the greater the risk of a marked correction and large price upswing in the future”, IEA explained.

Oil prices will probably rebound next year, Suhail Al Mazrouei, the United Arab Emirates’ energy minister, told a conference in Abu Dhabi. “And we see an increase in the demand for OPEC crude”, he said in a speech published on the organization’s website on Monday. In other words, technological advancements and policy prescriptions for renewable resources might not make as big an impact in the market if fossil fuels are cheaper to buy.

“With gas prices already low in North America, and dragged lower elsewhere by ample supply and contractual linkages to oil prices, there is plenty of competitively priced gas seeking buyers in the early part of the Outlook”, the IEA said in the report.

U.S. benchmark West Texas Intermediate for delivery in December rose 36 cents to $44.65 per barrel compared with Friday’s close. It has plunged 8.4 percent since November 3 as fresh worries about global demand weigh on the market.

The Paris-based body, which advises developed countries on energy policy, says it expects oil prices to return to $80 per barrel in 2020, with further increases after that. December Brent crude LCOZ5, -0.27% on London’s ICE Futures exchange fell $0.26 or to $47.18 a barrel.

The IEA anticipates demand growth under its “central scenario” to rise by an average of 900,000 barrels per day (BPD) annually until 2020, gradually reaching demand of 103.5 million barrels per day (MMBPD) in 2040 – up almost 13 MMBPD from 2014 levels.

The production ceiling may be raised by 1 million barrels a day to 31 million barrels, the delegates said, asking not to be identified because the discussions are private.

But the oil industry will have to spend $630 billion a year just to keep production levels even with output this year. Such a concentration of global supply would be accompanied by elevated concerns about energy security, with Asian consumers – the final destination of a huge share of regionally-traded oil – particularly vulnerable.

Bucking doom and gloom from anti-coal activists and analysts, the IEA says in its 2015 World Energy Outlook that Australia’s coal exports will increase by more than a third to 424 million tonnes a year between now and 2040.

The IEA estimates investment has already fallen by 20 percent this year.

India’s policymakers and private sector will have to draw $2.8 trillion to meet the nation’s energy needs over the next 25 years, and of that, about three fourths of it would go toward building power plants and boosting electricity capacity.