A lightning fast rally in oil prices is reversing. Here's why

Gladys Abbott
November 17, 2017

But on Tuesday, the International Energy Agency lowered its outlook for demand growth in both 2017 and 2018, in part because of warmer than expected winter weather.

In a report released two days ago, the International Energy Agency (IEA) had projected that the USA will be the world's leading producer of oil and gas by 2025.

OPEC and other big exporters including Russian Federation agreed a year ago to cut crude output by 1.8 million barrels per day (bpd) between January this year and March 2018 to try to bolster prices.

Oil markets edged up on Thursday as expectations that OPEC will extend production cuts at a meeting at the end of this month outweighed rising US crude production and inventories. The producer group raised its forecast for demand growth by 130,000 barrels a day in 2018.

Oil prices have slipped from the two-year highs hit last week by both crude benchmarks on signs that USA supply is rising and could potentially undermine OPEC's efforts to tighten the market.

"If they don't, or if the period will be shorter than nine months, I think we will see even lower prices".

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Oil prices have risen in recent months, after both Opec and non-Opec countries struck a landmark deal at the end of previous year to cut back production to combat a global oil glut.

Gasoline inventories - one of the products that crude is refined into - rose by 894,000 barrels, confounding expectations for a draw of 919,000 barrels while supplies of distillate - the class of fuels that includes diesel and - fell by about 799,000 barrels, less than the expected decline of 1.3 million barrels.

The Energy Information Administration is out with the government's numbers this morning.

The recent gains recorded by global oil prices have slipped as the commodity has lost more than $2 in seven days.

Chris Watling, CEO and chief market strategist at Longview Economics, was quoted as saying that the adoption of EVs could lead to global peak oil demand as soon as 2023, which will result in oil prices crashing to $10.

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