Low oil prices the new normal

The Queensland Curtis LNG (QCLNG) Project.

The Queensland Curtis LNG (QCLNG) Project.

Low oil prices are here to stay and could be the new normal, according to the latest outlook from the International Energy Agency (IEA).

The IEA has flagged a prolonged oversupply of oil in the global market, resulting in continued low oil prices.

The IEA’s Oil Market Report for August warned that if Organisation of the Petroleum Exporting Countries (OPEC) supply remained the same, a projected global oil oversupply would be likely to persist into 2016.

The outlook comes after the IEA published its Natural Gas Outlook for 2015, which warned against the inherent connections between the two commodities.

And given the fact that a number of LNG supply contracts are linked to oil futures, stocks in LNG have taken a battering amid the release of full-year reports by LNG producers, which saw Santos reject speculation of an equity raising to complete construction at its GLNG Project.

The IEA simultaneously flagged global demand for natural gas to increase off the back of the sustained low oil price.

By August 2015, global benchmarks for oil had sunk around 25 per cent below June levels, with Brent crude oil priced at around $A58/bbl.

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