Oil price to rise gradually to USD80 by 2020- IEA

Benchmark USA crude futures slipped to a two-week low at US$43.55 (RM188.18) a barrel and were trading down over half a dollar from their last close at US$43.68 by 0003 GMT.

In its short term energy outlook, the U.S. Energy Information Administration revised down its 2016 production forecast to 8.77 million bpd, a reduction of 90,000 barrels per day (bpd) compared to last month’s outlook. Oil prices resumed their decline in Asia today, with global crude oversupply continuing to dampen investors’ sentiment despite occasional rallies.

Countries outside OPEC, have to go to reduce the supply of oil, while OPEC not to reduce its stake below 40%, RIA Novosti reports quoting OPEC Secretary General Abdullah al-Badri.

“I expect no change… the only interesting thing would be if they (OPEC) say anything about how to deal with additional supplies coming from Iran next year”, said Commerzbank’s Fritsch.

However, while prices are low, markets will become increasingly vulnerable, given the point that only highly efficient producers will be able to stay in production.

Continued low prices could have a negative impact on the environment, because 15 percent of energy savings are lost in a low oil price scenario, the agency says.

Oil prices were steady on Tuesday after the worldwide Energy Agency noted unprecedented declines in investment, though gains were limited as the overall picture of a market in glut remains.

Weaker-than expected growth in China’s industrial sector also put pressure on oil prices on Wednesday. If United States law would allow it, the nation could be a major oil exporter by the end of decade, he said.

But over a longer period, from 2013 to 2040, the agency said that it sees USA oil demand sinking to its lowest level since the 1960s, with the European Union following a similar path, as demand for natural gas and renewables rises. Even if the group’s 12 members decided next month to reduce production by 1.5 million barrels a day, that wouldn’t be enough to balance the market, El-Badri said.

The executive director of IEA, Mr. FatihBirol stated that in the past 25 years, markets have not witnessed any decline in investments for two consecutive years.

“We have to think carefully about the oil security implications of a very few number of countries exporting a big chunk to the global markets alone”, he said.