Oil prices could fall
further says International Energy Agency
The IEA said lower
oil prices were likely to last well into 2016.
The agency added the world oil
market was unable to absorb the huge volumes of oil now being produced.
It follows the
massive drop in prices which started last summer.
The
price of Brent crude fell sharply last
year from $115 a barrel in June to $45 a barrel in January.
The current price of
Brent crude is $59 a barrel.
The fall in prices
has led oil firms to cut back investment in exploration, while North Sea oil
has come under significant pressure.
All seven major
global oil firms have also reported annual declines in profit as a result of
lower oil prices.
'Oversupply'
Only last month the
Office for Budget Responsibility (OBR) forecast North Sea oil and gas revenues
would fall to below 0.1% of GDP over the coming decades.
It said the tax take
from North Sea oil and gas had already fallen by 80% in the last three years.
"The oil market
was massively oversupplied in the second quarter of 2015, and remains so
today," the IEA said in its monthly report.
"It is equally
clear that the market's ability to absorb that oversupply is unlikely to last.
Onshore storage space is limited," it said, adding: "Something has to
give."
"The bottom of
the market may still be ahead."
Core members of the
Organisation of Petroleum Exporting Countries (Opec) have continued to produce
the same level of oil in the past year despite falling oil prices in an attempt
to regain market share.
US oil production
has also soared in recent years, as fracking - or the process of extracting oil
from shale rock by injecting fluids into the ground - has revolutionised oil
production in the country.
Source - BBC
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