OIL and natural gas markets are set to remain oversupplied until 2015, according to the International Energy Agency in its latest annual medium-term outlook.
The report talks of “comfortable spare capacity” for both energy commodities, predicting that oil prices may reach an average of $86 a barrel by the middle of this decade.
This is roughly $10 a barrel up from current levels, although it should be borne in mind that oil has been north of $80 a barrel for a period during the current year.
The agency warns, however, that concerns remain over the potential for a return to greater market volatility.
It pointed to uncertainties within the physical oil market, especially regarding the true pace of demand growth in emerging economies.
The IEA’s 2010 medium-term outlook suggests that there are ample supplies of both commodities for the time being, which is in sharp contrast to the warnings issued over the past couple of years regarding the possibility of shortages and sky-high prices.
The overall tone of the IEA report contrasts with the last two or three years, when the West’s energy watchdog warned about potential shortages.