(MENAFN- The Peninsula) Oil prices are expected to keep sliding well into 2015, held down by weak demand and increased shale production, the International Energy Agency said yesterday.
Global prices have collapsed by some 30 percent since June, and crude futures slumped on Thursday to lows not seen since September 2010, diving well below the $80-per-barrel mark.
The IEA said while there had been speculation that the high cost of shale extraction "might set a new equilibrium for Brent prices in the $80 to $90 range, supply/demand balances suggest that the price rout has yet to run its course".
"Our supply and demand forecasts indicate that barring any new supply disruption, downward price pressures could build further in the first half of 2015," it added.
Prices were unlikely to reverse course anytime soon, as there are "deep structural changes" transforming the industry.
China, which in recent years has had a voracious appetite for energy, is now entering a less oil-intensive stage of growth, while technological innovations have unlocked shale resources in North America.
"A return to previous price highs may not be a close prospect, as it is increasingly clear that we have begun a new chapter in the history of the oil markets," the IEA said.
Dealers were also betting that the 12-nation Opec cartel, which is meeting on November 27 in Vienna, would decide against cutting output quotas.
This is because Opec is battling to maintain its foothold in the US market against the flood of oil being extracted domestically from shale rock - which had in part caused the global glut.
As pressure mounts on Opecto slash output, Ibrahim Ali Al Nuaimi, oil minister of the cartel's kingpin Saudi Arabia, said that "talk of a price war is a sign of misunderstanding - deliberate or otherwise - and has no basis in reality".
"We do not seek to politicise oil, nor do we collude against anybody. For us, it is a question of supply and demand. It is purely business," he said on Wednesday.
In a report to the G20 group of leading industrial powers ahead of a summit in Brisbane this weekend, the International Monetary Fund said the "recent appreciable fall in oil prices, if sustained, will boost growth".
But the lower prices are hurting some crude exporters, including Venezuela, Iran and Russia. The latter two are also struggling with the impact of Western sanctions.
The IEA noted that production at current or even lower prices may not be uneconomical, but "it may take a toll on social stability and thus indirectly affect production prospects".
Prices had touched a high in June of $115.71, when the Islamic State organisation's offensive in Iraq had pushed up costs. But abundant supplies, tepid demand and the strong dollar have forced them back down.
Supply growth also shows few signs of abating. On Thursday, US production hit a new record.
The world is awash in oil even as both Iraq and Libya-the two countries responsible for Opec's recent recovery in supply growth - are both in the throes of conflicts.
Demand growth is meanwhile expected to remain at the five-year low rate of 680,000 barrels a day in 2014, reaching an estimated 92.4 million barrels a day, the IEA said.
"Relatively weak Chinese demand growth, coupled with large absolute declines in both European and OECD Asia Oceania, curb the upside momentum otherwise provided by gains in other non-OECD economies and the US," it said.
Accelerating global momentum is seen lifting demand growth to reach 1.1 million barrels a day to 93.6 million barrels a day.
Oil rose to $79 a barrel yesterday having earlier hit a four-year low, supported by speculation that the prospect of even lower prices may nudge OPEC producers towards cutting output at a meeting in two weeks.
Brent hit an intra-day low of $76.76 earlier in the session, the lowest since September 2010, before climbing back up to $79.10 as of 1417 GMT. US crude was up 58 cents at $74.79.
Global benchmark Brent is down from $115 in June and has dropped for eight weeks in a row, its longest weekly losing streak since records began in 1988.
Algeria and Venezuela will join forces to defend prices, Venezuela's Foreign Minister was quoted on Thursday as saying.
"I think Algeria and Venezuela are saying that they are willing to commit if the rest of Opec is willing," Bjarne Schieldrop, chief commodity analyst at SEB in Oslo, told the Reuters Global Oil Forum.
"Hopefully we will have enough pain ahead of the Opec meeting in order for Opec to become Opec again."
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