Crude prices rise by 3.1 per cent
Light, sweet crude also rose by $1.70, or 2.9 per cent to $59.84 a barrel on the New York Mercantile Exchange.
Prices fell Monday on concerns about weakening Chinese demand and continued oversupply, after the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain its current high level of production.
The price of OPEC basket of 12 crudes was down at $59.42 a barrel on Monday.
Meanwhile, the International Energy Agency (IEA) said that lower oil prices would feed a pick-up in global natural gas demand over the next five years following a marked slowdown in 2013 and 2014.
IEA in its 2015 Medium-Term Gas Market Report, released last week, the growth in demand will fall short of previous forecasts.
The annual report, which gives a detailed analysis and five-year projections of natural gas demand, supply and trade developments, sees global demand rising by two per cent per year by the end of the forecast period, compared with 2.3 per cent projected in last years outlook.
A significant reason for the downward revision is weaker gas demand in Asia, where persistently high gas prices until very recently caused consumers to switch to other options.
IEA Executive Director, Maria van der Hoeven stated the belief that Asia will take whatever quantity of gas at whatever price is no longer a given. “The experience of the past two years has opened the gas industry’s eyes to a harsh reality: in a world of very cheap coal and falling costs for renewables, it was difficult for gas to compete.”
According to the report, in the short term, gas demand will benefit from plunging prices, adding that the long-term outlook for gas has become more uncertain – especially in Asia. “A few Asian countries have decided to move ahead with plans to expand coal-fired power generation instead of gas-fired generation. For the fuel to make sustained inroads in the energy mix, confidence in its long-term competitiveness must increase,” the report stated.
It stated: “In the short term, gas markets will need to cope with a flood of new LNG supplies. The report projects global LNG export capacity to increase by more than 40 per cent by 2020, with 90 per cent of the additions coming from Australia and the United States. Lower oil prices pose little risk to the timing of projects already under construction. The Australian projects are at an advanced stage of development, while project’s operators in the United States have limited price exposure once deals have been signed. New projects, however, will struggle to get off the ground at current prices.
“As LNG supplies surge over the next five years, Europe is set to offer an important outlet. The report projects that the region’s LNG imports will roughly double between 2014 and 2020. Despite the foreseen increase in LNG intakes, the report does not anticipate a meaningful reduction in European imports from Russia, which will remain locked in a 150 to 160 bcm range. In OECD-Europe, domestic gas production is projected to continue to fall and to stand 25 per cent below its 2010 level by 2020. Compounding the declining trend in production is a moderate recovery in demand. As a result, European gas import requirements are set to increase by almost one-third between 2014 and 2020.
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