REUTERS
The International Energy Agency (IEA) does not expect sharp oil price rebound to $100 per barrel in the long-term perspective, even if investment falls short, while in the medium term, the market will see a steady excess of production over demand, the IEA said in its annual World Energy Outlook.
The IEA said oil demand would rise by less than 1% a year between now and 2020, a slower pace than necessary to quickly mop up an oil glut that has driven prices to multiyear lows, The Financial Times reported.
The oil market is said to remain oversupplied until the end of the decade as an unstoppable push for cleaner fuels and greater efficiency offsets the effect of lower prices, the world's leading energy forecaster said, according to the report.
The IEA notes that a slowdown in oil demand growth follows a near 15-year surge in consumption, driven by the rapid industrialization of China and other emerging market economies. But Beijing is now moving from less energy-intensive growth towards a more consumer-led economy.
"We are approaching the end of the single largest demand growth story in energy history," Fatih Birol, executive director of the IEA, told the Financial Times ahead of the launch of its long-term forecasts.
The IEA does not expect crude oil to reach $80 a barrel until 2020, according to its "central scenario." After 2020, oil demand growth is expected to grind almost to a halt, increasing just 5% over the next 20 years, the IEA said.
The IEA forecasts oil demand will not hit 103.5 million barrels a day (b/d) until 2040 — it is currently 94.5 million b/d.
Collectively, the United States, EU and Japan will see their oil demand drop by around 10 million b/d by 2040, the report says.
The IEA notes that inflexibility of OPEC's policy that is unwilling to cut production makes the low-price scenario more likely.
Oil supply outside OPEC will cease growing by 2020 due to spending cuts, the IEA said in the report. Investment will be cut by 20% this year and will drop further in 2016, the first two-year decline in spending since the 1980s. Cuts to industry spending will result in non-OPEC crude supply leveling off at about 55 million b/d before 2020. The U.S. shale production could reach their peak output levels by the early 2020s before they start to decline.