"We expect this upswing in production to continue throughout 2017 due to the rise in rig activity, increased capital expenditure budgets, and the roughly two- to four-month lag between spudding shale wells and production", the agency noted.
The recent drop in oil industry investment brought on by weak prices threatens to significantly slow supply growth in the long term, and could lead to a shortage when it comes to meeting global demand, the International Energy Agency said in its five-year oil market forecast released Monday.
"And unless investments globally rebound sharply, a new period of price volatility looms on the horizon", he said.
Investment in the US shale basin is picking up already, and there is evidence of growth in supply from Canada and Brazil, but the IEA said early indications of global spending this year were "not encouraging".
"In 2016, there was $450 billion investment in oil investment". The IEA is hoping to see that increase by 20 per cent, a further $90 billion USA in 2017.
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Russian Federation expects oil prices to stay at around $55 to $60 per barrel in 2017, he said.
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"The oil market has been rebalancing and the powerful forces of supply and demand have been working", said Dan Yergin, vice chairman of conference organizer IHS Markit and a Pulitzer Prize-winning oil historian. "We may see markets tighten around 2020 and spare production capacity shrink big time". "We are witnessing the start of a second wave of USA shale oil growth", he said. He named China and India as drivers of growth and predicted that oil export trade routes will also shift, something that may cause problems for Canada.
The downside drag on oil prices of higher United States crude production being cancelled out by the upside risk of Opec and non-Opec production cuts has meant that oil benchmarks have barely budged from the current mid-$50 prices, and have shown little appetite for a climb to $60.