Global agency sees oil price recovery but no return to highs

Cars pull into an Esso gas station in Richmond Hill, Ontario, in this file photo from January 30, 2015. [Photo/Agencies]

PARIS?- 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 U.S. 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.

"The fact that lackluster demand was part of the reason for the recent price collapse suggests that the sell-off will only go so far in boosting economic growth and lifting oil demand," the agency said.

The IEA now forecasts global oil demand to reach 93.3 million barrels a day in 2015, well below the 94.2 million barrels forecast in its last report.

"Unlike earlier price drops, this one is both supply- and demand-driven," the IEA said.