Low prices stimulate oil demand
Demand for oil is increasing the fastest pace in five years because of the decline in price to below $ 50 a barrel to the latest report from the International Energy Agency (IEA) published on Wednesday. The institution has revised sharply upwards its forecast for growth in consumption of raw material.
Energy Agency, however, points out that lower prices will begin to cause contraction of the more expensive production until next year. This is a blow to the plans of the Organization of countries – Petroleum Exporting (OPEC), which rely on low prices to protect market share from rivals such as shale producers in the US, notes Wall Street Journal.
According to the latest forecasts of the energy agency, global demand for crude oil will grow by 1.6 million. Barrels per day this year. This represents an increase of 200 thousand. Barrels per day compared to previous expectations. For next year, the agency predicts growth of 1.4 million. Barrels per day. IEA argues its decision by the reaction of the users of lower prices and improved macroeconomic expectations for developed economies.
“After oil prices collapsed by three-digit numbers last year to below 50 dollars in this, consumers seem to react more quickly from suppliers,” the report said the agency. Experts also point out that the background of the latest decline many representatives of the oil industry are preparing for a prolonged period of low prices.
Expectations of increased demand for MEA coincide with recent estimates of OPEC. Oil cartel predicted demand growth of 1.38 million. Barrels per day in 2015, which is 90 thousand. Barrels a day more than previous estimates. OPEC has contributed to the collapse in prices with its decision to not reduce production to stop the growth of competitors with higher production costs, primarily shale companies in the United States.
IEA expects production growth of non-OPEC really slow this year, but still not start to decline. According to forecasts, yields in these countries will grow by 1.1 million. Barrels a day in 2015 after a record increase of 2.4 million. Last. Only in 2016 is expected to decrease by 200 thousand. Barrels per day. IEA expects the largest drop came from Russia, while US growth forecast to around 190 thousand. Barrels per day.
“While rebalancing the market evidently has begun this process is likely to be prolonged and oversupply is expected to be sustained in 2016. This will lead to an even greater increase in stocks worldwide,” the agency said.