Photo: Reuters/Christian Hartmann
Photo: Reuters/Christian Hartmann

Oil fell by more than $1 in morning trading in New York after the International Energy Agency reported that recent increases in the oil price and milder-than-normal weather had dampened demand growth.

Quiet in Saudi Arabia after last week’s dramatic consolidation of power by Crown Prince Mohammed bin Salman also contributed to the decline, as the political risk premium in the oil market attenuated.

IEA cut its crude demand growth outlook by 100,000 barrels a day for this year and next, as the Wall Street Journal reports. The modest change in demand could be enough to delay the process of diminishing the supply glut, according to analysts.

The report also said US oil output will outpace other producers until 2025 to make the US the top producer, as the Financial Times reports:

“The US will become the undisputed global oil and gas leader for decades to come,” said Fatih Birol, IEA executive director. The country is expected to account for 80 per cent of the increase in global supply over the same period. […]

“The growth in production is unprecedented, exceeding all historical records, even Saudi Arabia after production from the mega Ghawar field or Soviet gas production from the super Siberian fields,” Mr Birol said.

If US production stays at current levels, the IEA said, and a trend towards adopting electric cars accelerates, prices could stay between US$50 and US$70 a barrel until 2040.