IEA Part Deux: Return of the Permabull

It has been about four months now since the last time the IEA (International Energy Agency) has made a bullish commotion. During the protracted move higher, it always seemed that T Boone, Goldman, and the IEA took turns stoking the bull market. Goldman has rolled already (as I have previously noted) and T Boone has backed off his bullish drumbeat.

But here is the IEA's latest take. They are back at it again, discussing decreasing supply (due to the depletion of existing oilfields) and increasing demand from the Far East (due to the modernization of the economies of China and India). The text below is from the Financial Times:

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de-mand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries' demand will require investments of $360bn (£230bn) each year until 2030. The agency says even with investment, the annual rate of output decline is 6.4 per cent.