Slashed spending by drillers could lead to price spike, IEA says

PARIS -- Global oil supply growth is plunging as drillers slash capital expenditures severely, Europe's energy policy group said Monday, which could eventually result in an energy shock.

See Full Article

Reduced spending by energy companies will lead to a more balanced market in 2017, but "investment cuts pose supply security risks down the road," according to a Monday report from the International Energy Agency.

"It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future," said IEA Executive Director Fatih Birol.

The price of U.S. crude soared almost 6 per cent Monday.

Capital expenditure by energy companies fell 24 per cent last year and is expected to drop another 17 per cent this year, the IEA said -- the first two-year decline since 1986.

The IEA now projects 4.1 million barrels a day being added to global oil supply between 2015 and 2021, down sharply from the total growth of 11 million barrels a day between 2009 and 2015.

A year ago, the Paris organization of 29 major oil importing nations had forecast a "relatively swift" recovery. But the decline has continued, with the price for a barrel of oil dipping below $30 in recent weeks, levels last seen in 2003.

Birol cited the extraordinary volatility in oil markets, which have made forecasts "more difficult than ever," for the changing outlook.

Oil prices have tumbled 70 per cent since mid-2014, and gasoline prices have followed.

The U.S. Energy Information Agency expects an average price of $1.98 per gallon nationwide this year. The last time oil averaged less than $2 for a full year was 2004.

A barrel of U.S. oil traded for around $33.45 in midday trading Monday.



Advertisements

Latest Economic News

  • Asian stocks weak as investors weigh U.S. data, Brexit plans

    Economic CTV News
    HONG KONG -- Asian stocks were listless Wednesday as investors weighed strong U.S. economic reports against uncertainty as Britain readies a formal request to leave the European Union. KEEPING SCORE: Tokyo's benchmark Nikkei 225 index was less than 0.1 per cent lower at 19,194.20 while South Korea's Kospi was flat at 2,163.54. Source
  • Barrick, Goldcorp joining forces to work on projects in Chile

    Economic CTV News
    TORONTO - Two of Canada's biggest gold companies are creating a new joint venture to advance several mining projects clustered in northern Chile. The joint venture will be owned equally by Toronto-based Barrick Gold Corp. Source
  • What makes a cyberattack? Experts lobby to restrict the term

    Economic CTV News
    LONDON -- When U.S. senator John McCain told Ukrainian television that the allegedly Russian-backed breach of the Democratic National Committee's server was "an act of war," Michael Schmitt cringed. Schmitt, a professor of law at the U.S. Source
  • CEO of International Air Transport Association criticizes electronics device ban

    Economic CTV News
    MONTREAL -- The head of the International Air Transport Association says it's difficult to understand how banning electronic devices in carry-on baggage on flights will improve security. In a prepared text of a speech Tuesday, IATA CEO Alexandre de Juniac called on governments to work with the transport industry to ensure passengers aren't separated from their laptops, tablets and other devices. Source
  • Former Valeant CEO suing company over unpaid shares

    Economic CBC News
    Former Valeant Pharmaceuticals CEO Michael Pearson is suing his former employer for breach of contract for failing to deliver more than three million shares and consulting fees. In a lawsuit filed Monday in the U.S., Pearson alleges that Valeant breached his separation agreement by refusing to hand over 580,676 restricted share units and about 2.4 million performance share awards he was granted. Source
  • Cruise line stops port calls at Mexican resort of Acapulco

    Economic CTV News
    MEXICO CITY - The U.S. cruise ship line Holland America says it has halted port calls at Mexico's troubled resort city of Acapulco and will sail to other destinations in the country "due to recent security concerns. Source
  • Home Capital shares dive after company terminates CEO

    Economic CBC News
    Shares of Home Capital Group Inc. traded down more than seven per cent on the TSX on Tuesday, a day after the company said it had terminated its top executive. Home Capital announced Monday after stock markets had closed that that Martin Reid, its president and CEO, was out, effective immediately. Source
  • Elon Musk's latest venture: Brain-computer interfaces

    Economic CTV News
    NEW YORK -- Tech billionaire Elon Musk is announcing a new venture called Neuralink focused on linking brains to computers. The company plans to develop brain implants that can treat neural disorders and may one day be powerful enough to put humanity on a more even footing with future superintelligent computers, according to a Wall Street Journal report citing unnamed sources. Source
  • Former Valeant CEO Michael Pearson sues for breach of contract

    Economic CTV News
    MONTREAL -- Former Valeant Pharmaceuticals CEO Michael Pearson is suing his former employer for breach of contract for failing to deliver more than three million shares and consulting fees. In a lawsuit filed Monday in the U.S. Source
  • Ford investing $1.2B in 3 Michigan plants, adding 130 jobs

    Economic CTV News
    DETROIT -- Ford Motor Co. is investing US$1.2 billion in three Michigan facilities, including an engine plant where it plans to add 130 jobs. U.S. President Donald Trump applauded the move in an early morning tweet. Source