OTTAWA — Prospects for the long-sought rebalancing of oil markets are rapidly fading, sending crude prices and share prices tumbling Tuesday.
In another bleak forecast for the battered industry, the Paris-based International Energy Agency said on Tuesday that a weakened global economy has sharply reduced the growth in crude demand, while producers in the Middle East continue to pump oil at record levels.
As a result, oil markets won’t come back into balance until the end of 2017 unless there are unanticipated outages like last spring’s fires that shut more than one million barrels a day of production from the oil sands, said the IEA, which advises rich countries on energy policy.
The Organization of the Petroleum Exporting Countries (OPEC) released its own gloomy report on Monday, pointing to stronger-than-anticipated oil production from non-member states, notably U.S. shale producers.
Traders reacted sharply to the two reports. The benchmark U.S. crude, West Texas intermediate, fell as much as 3 per cent before settling down $1.39 at $44.90 (U.S.) per barrel, while Brent crude fell 2.5 per cent to $47.10.
Oil company stocks also fell broadly and sharply on Tuesday, with Crescent Point Energy Corp. down 5.9 per cent, Canadian Natural Resources Ltd. off 3.8 per cent, Cenovus Energy Inc. down 3.7 per cent and Suncor Energy Inc. off 1.8 per cent.
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