Oil prices rebound after four-day retreat

The report includes the IEAs most up-to-date oil demand, production and pricing estimates in what has been an extremely volatile and unpredictable global commodities market.

Shale production is expected to fall for an eighth consecutive month in December, according to a forecast on Monday from the US Energy Information Administration (EIA). Most other producers would find prices that low unsustainable, and would be priced out of the market.

While China’s demand levels off, demand in India will take off, the IEA said in its 2015 World Energy Outlook report released Monday. Under a more bullish scenario, the IEA said oil could rebound to around $80 a barrel by 2020 as the oversupplied market begins to balance.

In its closely watched World Energy Outlook, the IEA anticipates oil demand growth under its central scenario will rise less than 1% a year until 2020.

“The weakness of global manufacturing activity is… putting pressure on energy demand”, JBC Energy said, adding that it expected a significant drop in oil demand growth in 2016.

Mr. Rumhy said, “This is a commodity that if you have 1 million barrels a day extra in the market, you just destroy the market”. But what was tolerable a year ago at $100 a barrel has become less profitable-or unworkable-in today’s world of $50 a barrel crude.

The IEA said that spending on exploration and production has fallen 20% this year, and it warned against further cuts. “Renewables-based generation reaches 50 percent in the European Union by 2040, around 30 percent in China and Japan, and above 25 percent in the United States and India”, the IEA said.

While the agency believes world energy demand will grow by almost one-third between 2013 to 2040 (due entirely to developing countries) and that an “energy transition” leaning towards renewables is already underway, it theorizes that low oil prices could do away with the long-term cost savings of efficient technologies and thus “undercut this crucial pillar of the energy transition”.

The drop in crude oil prices is being welcomed by many; however, the cut is only good news for everyone who’s myopic.

“As long as you keep the price above $US80 a barrel to $US100 a barrel this non-OPEC supply will stay until 2021 if we subsidise them every year”.

The global Energy Agency also predicts an end to production growth from outside of OPEC saying it will halt over the next five years.