OPEC oil glut will prevent the crude prices recovery in 2016 – IEA

Almaty. September 16. Silkroadnews – OPEC oil glut will prevent the crude recovery in 2016, crude price growth to be expected not earlier than in the second half of 2017, the head of the International Energy Agency (IEA) Fatih Birol said.

According to the newspaper «Kommersant», earlier the IEA lowered its forecast for growth in global demand for crude oil by 0.1 million bpd to 1.3 million bpd for this year and by 0.2 million bpd to 1.2 million bpd for 2017. The reason behind was a decline in support for demand by India and China.

With this the non-OPEC crude output is expected to fall by 840 thousand bpd in 2016 followed by growth recovery by 340 thousand bpd next year. As for OPEC, for the year the cartel has increased its production by 930 thousand bpd and soon can equalize a reduction in deliveries by other countries by 1.4 million bpd year on year (including 300 thousand bpd in August).

The low crude prices affected the level of investments, last year the investments in the fuel and energy sector decreased 8% to $1.8 trillion. The shares of investments made into oil and gas amounted to 46% (including production – $580 billion), electric power generation and distribution – to 37% (70% of them on renewable sources), with remaining part invested to improve energy efficiency. The main decline in investments took place in production sector, here the investments fell by a quarter. In 2016, the decline could reach another 24% (to $450 billion). The drop in oil shale mining investments has made 52% for the two years (though the drillers mass bankruptcy is out of the question).

According to the IEA estimations, China has become the major investor in the energy industry in 2015. Given the fact that at least half of the investment goes to upgrade aging facilities, after the crude price recovery market may experience a lack of investments, the IEA experts warn, which can be especially important for the construction of energy infrastructure (pipelines, LNG terminals). An «investment collapse» is expected in the LNG sector for 2017 as none of the projects considered has not been agreed fully. Among the other things this direction is also hampered by low prices for coal in Asia – taking only 4% of investments with 28% of consumption.