The world’s top energy forecaster has estimated that oil prices will remain below $80 per barrel until the end of this decade, partly due to China’s slowing economy.
Earlier, ratings agency Moody's predicted that commodities will not rebound in the near future due to the same reason - China's slowdown.
Meanwhile, the International Energy Agency said in its annual report that the current glut of oil will probably continue up until 2020, - which means the price of crude, currently below $50 per barrel, will only climb slowly in the IEA’s "central scenario".
And China’s economic downturn is one key factor. The IEA says:
"The single largest energy demand growth story of recent decades is near its end: China’s coal use reaches a plateau at close to today’s levels, as its economy rebalances and overall energy demand growth slows, before declining."
The agency highlights that the world has made progress towards cleaner fuels, and renewable sources:
"There are clear signs that an energy transition is underway: renewables contributed almost half of the world’s new power generation capacity in 2014 and have already become the second-largest source of electricity (after coal)."
The IEA also notes that demand for oil could be even weaker than its central view, as prices might stay even lower for longer. That would be welcomed by consumers, but risks “energy-security concerns” by heightening reliance on a small number of low-cost producers.
Crude oil futures for December delivery last traded at $43.98 a barrel, up 0.25%.
Brent oil for January delivery was down 0.13% at $47.86 a barrel.
