Oil steady after IEA sees sharp decline in investment

Oil prices were steady on Tuesday after the International Energy Agency noted unprecedented declines in investment, though gains were limited as the overall picture of a market in glut remains.

Brent crude, the global benchmark, was down 0.03 cents at $47.17 a barrel by 0517 ET, having fallen for four trading days in a row.

U.S. crude rose 0.10 cents to $43.97 a barrel.

The International Energy Agency said in its World Energy Outlook that oil is 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.

The IEA estimated investments in oil will decline more than 20 percent this year and the trend would continue into 2016.

Oil majors have cancelled a total of 80 projects across the world this year because of low oil prices and cut capital expenditures 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 range bound 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 anaemic 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,” said Ben le Brun, market analyst at OptionsXpress.

Still, the comments from OPEC Secretary-General Abdullah al-Badri on the outlook for oil did provide a little bullish relief to 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 at a panel at the ADIPEC oil and gas conference in Abu Dhabi.

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

“I expect no change… the only interesting thing would be if they (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.