The IEA, a specialized agency of the OECD (Organisation for Economic Co-operation and Development), said Monday that the production of shale oil, which has placed the USA among the industry heavyweights, is expected to decline daily 600,000 barrels this year and 200 000 barrels per day in 2017. "But at the risk of tempting fate, we must say that today's oil market conditions do not suggest that prices can recover sharply in the immediate future - unless, of course, there is a major geopolitical event", the International Energy Agency wrote in its annual medium-term oil market report.
By 2021, Canadian oil output is expected to average 5.2 million barrels a day, which would represent an increase of 800,000 barrels a day, the report said.
Booming U.S. oil output due to new shale-oil drilling technologies helped push the global crude market into oversupply in mid-2014 and sent prices plunging. According to IEA, global supplies are likely to 4.1 million barrels/day over next five years, but that is much lower than rise of 11 million barrels/day in the previous five. In theory, lower fuel and energy costs should be a boon to many companies and consumers, a driver of spending, and in turn a boost to the US gross domestic product. The International Energy Agency said that it doesn't expect oil prices to recover significantly until 2017.
In futures trading at the Multi Commodity Exchange, crude oil for delivery in March was trading Rs 54, or 2.32 per cent lower, at Rs 2,275 per barrel in 10,934 lots.
According to the IEA, America remains the biggest contributor to the growth in the oil supply during the period between 2017 and 2021 representing over two-thirds of non-OPEC production gains whereas Iran would lead the OPEC pack. US shale oil production from hydraulic fracturing, or fracking, has made the nation a leading oil producer, resulting in a significant reduction in USA imports of crude oil in recent years.
At current crude prices, the IEA estimates that oil export revenue for OPEC as a whole will drop this year to $320 billion from a peak of $1.2 trillion in 2012 and $500 billion last year. ETFs and ETNs such as the Vanguard Energy ETF (VDE), the iShares US Oil Equipment & Services ETF (IEZ), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the VelocityShares 3x Long Crude Oil ETN (UWTI) are also influenced by the ups and downs in the oil market.
Investments in oil are expected to fall a further 17 percent this year, on top of a 24 percent decline in 2015, which marks the first time since 1986 that investment has fallen for two straight years. On the other hand, new production alliances could support crude oil prices.