Oil steady after IEA sees sharp decline in investment

[November 10, 2015]  By Sarah McFarlane

LONDON (Reuters) - Oil prices were steady on Tuesday after the International Energy Agency noted unprecedented declines in investment, though the overall picture of an oversupplied market limited any gains.

Brent crude, the global oil benchmark, was down 0.04 cents at $47.15 a barrel by 0706 ET, having fallen for four trading days in a row.

U.S. crude rose 0.11 cents to $43.98 a barrel.

The International Energy Agency said oil was unlikely to return to $80 a barrel before the end of the decade, despite unprecedented declines in investment, as annual demand growth struggles to top 1 million barrels per day.

In its World Energy Outlook, the IEA also estimated that investment in oil would decline more than 20 percent this year and the trend would continue into 2016.

Oil majors have canceled 80 projects across the world this year because of low oil prices and cut capital spending by as much as $22 billion, BP's head of exploration and production Lamar Mckay said.

The decline in investment, however, has not been enough to reverse oil's price weakness.

Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, said he expected Brent to remain stuck between $47 a barrel and $52 until the end of the year.

Further evidence of stockpiling, expectations of a rise in U.S. rates and anemic economic growth figures have helped push down prices in the last week.

"There's just nothing fundamental in the news flow over the past 24 hours or longer that makes us think there could be a fundamental turnaround anytime soon," OptionsXpress market analyst Ben le Brun said.

Still, comments from OPEC Secretary-General Abdullah al-Badri on the outlook for oil did provide a little bullish relief for the market.

"We are following the market day in and day out, month in and month out we see that 2016 is really producing some positive results," Badri said in Abu Dhabi.

OPEC holds its next policy-setting meeting on Dec. 4. and is widely expected to continue with its no-cut policy initiated in November last year.

"I expect no change ... the only interesting thing would be if (OPEC) say anything about how to deal with additional supplies coming from Iran next year," said Commerzbank's Fritsch.

Iran is keen to recover oil market share it lost as a result of international sanctions.

(Additional reporting by Aaron Sheldrick; editing by David Evans and David Clarke)
 

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