The price of oil is poised for a “relatively swift” recovery following the recent collapse to under $50 a barrel, but it will not come close to returning to the highs of past years, the International Energy Agency predicted Tuesday.
In a report, the Paris-based organization of 29 major oil-importing nations said the rebound in recent days of the oil price “will be comparatively limited in scope, with prices stabilizing at levels higher than recent lows but substantially below the highs of the last three years.”
The US benchmark oil contract fell from nearly $110 a barrel last summer to under $45 this year before a recovery to around $53 in recent days.
The IEA says the current price recovery is unlike those of the past, because of the sharp increase in production by non-OPEC countries, especially in the United States, as well as slowing demand in China and slimmed down fuel intensiveness in the developed world.
The agency also said that unlike past cycles, the low oil price is not expected to greatly boost economic output, because low demand was itself part of the reason for the recent price collapse.
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