According to a recent news feature in the Financial post, whispers of $100/barrel oil may have begun - or so says some market analysts.
One of the sources of the magic '100' is the The International Energy Agency. In their latest outlook published last Friday, it sees global demand exceeding 100 million barrels a day for the first time in the fourth quarter of this year.
The second of which is London-based consultancy Energy Aspects, where 'A slump in new production outside the U.S. shale patch' could result in Brent crude briefly back above US$100 a barrel next year.
As broad economic recovery shows demand of 1.7 million barrels a day in 2018, this number could actually be as high as 2 million according to Energy Aspects. They continued to say that there is “no real drag on oil demand growth.”
The IEA also predicts a significant rise in oil production this year, including “explosive growth” in the U.S. With the pickup in non-OPEC supply exceeding the increase in demand, it sees the world’s need for OPEC production falling by around 600,000 barrels a day compared with last year, to a level below last month’s output.
Alternatively, this demand could simply be spurred by low prices. The IEA indicated that the strong demand growth in the developed countries of North America and Europe in the first half of 2017 was “largely attributable to lower prices".
And, what happens to car owners in rich nations isn’t the only source of strain on demand. Developing countries used the opportunity of the sharp decline in prices to reduce subsidies on oil products, potentially amplifying the impact of higher crude on what end users pay.
