IEA: Global Crude Demand to Endure Wave of Electric Cars

IEA: Global Crude Demand to Endure Wave of Electric Cars

But the oil market isn't tightening as quickly as once anticipated, the IEA said in its monthly oil-market report.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.

With big gains forecast in its output of shale oil, the United States is expected to become a net oil exporter by the mid-2020s, the IEA said, adding that the US will account for 80 per cent of the increase in the global oil supply to 2025, which will maintain near-term downward pressure on prices. That means that, despite the rapid deployment of wind and solar power worldwide, global Carbon dioxide emissions will continue to rise until 2040, "far from enough to avoid the severe impacts of climate change", the IEA said.

Traders said they were cautious about betting on further price rises.

"Over the same period, USA gas companies ramped up their exports to Canada and Mexico, pushing net U.S. imports of pipeline gas down to around 25 bcm in 2016, compared with 80 bcm some ten years earlier", IEA economists said.

The energy agency said that oil production will be driven by continued growth in energy-hungry industries.

The sliver of hope for Canadian oil producers is that the sector is not going to be displaced by renewable energies and the rise of electric vehicles any time soon.

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Overall global energy needs are seen rising more slowly than in the past, but are still projected to expand by 30 per cent between today and 2040.

"The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market", Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London.

Oil-dependent Venezuela's crude output dipped last month below 2 million barrels per day, its lowest level in almost three decades, global producer group Opec said on Monday.

"Next year's demand growth will struggle to match this", the IEA said.

The U.S. shale surge could also mean an era of lower-for-longer oil prices.

Brent crude oil prices recently climbed to two-year highs of more than $60 a barrel due to supply disruptions, geopolitical concerns and a growing expectation that an Opec-led agreement to reduce production will be extended through 2018.

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