Low oil prices are set to spur on the fastest growth in oil demand for five years, the International Energy Agency (IEA) said today.
However, prices could stay lower for a long period as producers opt against rapidly cutting back production.
Global oil demand is set to grow by 1.6m barrels per day this year, the IEA said, up 260,000 barrels from its last forecast.
Prices are expected to take a further toll on non-Opec producers, with non-Opec supply growth slowing to 1.1m barrels a day this year, and falling by 200,000 barrels a day in 2016. But this reduction in supply is too slow to bring prices up any time soon, the IEA said. “While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 – suggesting global inventories will pile up further.
“Oil’s plunge below $50 barrels from triple digits a year ago has seen demand react more swiftly than supply.”