Tensions on global oil markets will ease over the next couple of years but will probably increase again after that, the head of the International Energy Agency (IEA) was quoted on Saturday as saying. “We expect the market to calm down over the next one to two years. But after that the situation will probably become more strained again,” Nobuo Tanaka, executive director of the Paris-based agency, told Germany's Der Spiegel magazine. Oil dropped $5 to a three-month low on Friday as concerns about global economic growth weighed on demand expectations. US light crude dipped to just below $115 a barrel, its lowest level since early May. Prices have slid since hitting a record high over $147 a barrel on July 11. London Brent crude settled at $113.33, down $4.53. Tanaka told Der Spiegel that to avoid future crises, producing nations had to “do their homework” and needed to increase capacity considerably. “Only the OPEC nations are able to boost capacity in an meaningful way,” he said. Tanaka noted that demand for fuel in the United States was sinking and some producers wanted to increase daily output. “Such signals are being reflected in the price,” he said. “We will in any case not experience again a price level of $20 a barrel as it was 10 years ago,” he added. “We are living in a time of high energy prices and there is no way back from that.” However, in the short term, prices were expected to slip further amid weakening demand caused by a global economic slowdown. Thirteen of 35 analysts surveyed by Bloomberg News, or 37 percent, said prices will drop through Aug. 15. Twelve of the respondents, or 34 percent, said oil will rise and 10 forecast little change. Last week 45 percent expected a decline. “Growing evidence of weak demand should discourage buying,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. US fuel demand averaged 20.1 million barrels a day during the four weeks ended Aug. 1, down 2.6 percent from a year earlier, the Energy Department said Aug. 6. US gasoline demand fell for a 15th consecutive week as high prices caused motorists to drive less, a MasterCard Inc. report Aug. 5 showed. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in a weekly report. US gasoline supplies fell 4.34 million barrels, or 2 percent, to 209.2 million barrels in the week ended Aug. 1, the biggest drop since April, according to Energy Department data released Aug. 6. Those figures and a 20 percent drop in crude prices since a record $147.27 a barrel set July 11 have other analysts forecasting prices will rise. “The gasoline number was a little surprising, and we maybe moved down a little too fast too soon to the downside,'' said Ryan McCabe, director of trading at Haly Oil & Acquisition in Malvern, Pennsylvania. The Organization of Petroleum Exporting Countries increased oil production 0.7 percent in July, as Saudi Arabian output reached a three-year high and Nigerian production rose to the highest since March, a Bloomberg survey showed. Crude oil for September delivery fell $9.90, or 7.9 percent, to $115.20 a barrel this week on the New York Mercantile Exchange. Oil touched $117.11 a barrel on Aug. 6, down more than 20 percent from the July 11 record of $147.27, a threshold often seen as the start of a bear market. Futures fell as low as $114.62 today. The oil survey has correctly predicted the direction of futures 48 percent of the time since its start in April 2004.
