U.S. oil output 'party' to last to 2020: IEA
By Alex Lawler
LONDON (Reuters) - The United States will remain the world's top source of oil supply growth up to 2020, even after the recent collapse in prices, the International Energy Agency said, defying expectations of a more dramatic slowdown in shale growth.
The agency also said in its Medium Term Oil Market report that oil prices LCOc1, which slid from $115 a barrel in June to a near six-year low close to $45 in January, would likely stabilize at levels substantially below the highs of the last three years.
Oil prices deepened their decline after the Organization of the Petroleum Exporting Countries in November shifted strategy and declined to cut its own output, choosing to retain market share that has been eroded by rival supply sources such as U.S. shale oil.
But IEA Executive Director Maria van der Hoeven, launching the report in London, said while OPEC may win back some customers while prices are low, it would not regain the market share it held before the 2008 financial crisis.
"This unusual response to lower prices is just one more example of how shale oil has changed the market," she said in a statement. "OPEC's move to let the market rebalance itself is a reflection of that fact."
The report said supply growth of U.S. light, tight oil (LTO) will initially slow to a trickle but regain momentum later, bringing its production to 5.2 million barrels per day (bpd) by 2020.
Total U.S. supply increases by 2.2 million bpd to 14 million bpd in 2020, with most of the expansion due to LTO.
"The price correction will cause the North American supply 'party' to mark a pause; it will not bring it to an end," said the IEA, which advises industrialized countries on energy policy. Continued...