IEA says hopes of higher, stable oil prices could be dashed quickly

US oil and gas 'resurgence' expected as global demand grows

Oil prices fell for a third day in a row on Tuesday on forecasts for rising USA crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency (IEA).

Oil is already facing stiff competition from ever-cheaper and more environmentally friendly energy sources as traditional fossil fuel users switch to cleaner, low-carbon alternatives, CNBC reported. It expects global demand for oil to even rise in the decades ahead.

"Using a scenario whereby current levels of Opec [Organisation of the Petroleum Exporting Countries] production are maintained, the oil market faces a hard challenge in 1Q18 with supply expected to exceed demand by 0.6m bpd followed by another, smaller, surplus of 0.2m bpd in 2Q18". U.S. West Texas Intermediate (WTI) crude was at $56.72 per barrel, down 4 cents.The dips came after both crude benchmarks early last week hit highs last seen in 2015, but traders said the market had lost some momentum since then."Oil is fairly calm".

In what could come as grim news for officials attending global climate talks in Bonn, Germany, the IEA expects oil demand to keep rising until 2040.

Solar power will surge globally in the coming decades, but oil demand will also continue to grow, according to a new report from the International Energy Agency.

The oil market should be able to find a longer-term equilibrium, with the oil price in the range of $50-70 a barrel, the agency said.

IEA said that if current levels of OPEC production were maintained, the oil market would face a "difficult challenge" during the first quarter of 2018 on the back of supply exceeding demand by 600,000 bbl/day followed by another, smaller, surplus of 200,000 bbl/day in the second quarter of the year.

In fact, the monthly report published by IEA on Tuesday would back that theory up as it lowered its crude demand forecast for the whole of 2017 and 2018, by 50,000 bbl/day and 190,000 bbl/day respectively.

According to the IEA, China overtakes the U.S. as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day in 2040.

"Prices ... are starting to look like a pause or pullback is needed", said Greg McKenna, chief market strategist at futures brokerage AxiTrader. Global energy demand is 30 per cent higher by 2040 - but still half as much as it would have been without efficiency improvements.

Between 2017 and 2040 the IEA estimates that more solar power capacity will be added globally each year than any other source of energy, with an annual average increase of almost 70 gigawatts.

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