Oil prices headed lower today as the International Energy Agency (IEA) called for a “grand coalition” to confront climate change.
The IEA said: “This effort would be greatly enhanced if more oil and gas companies were firmly and fully on board.”
State-owned oil companies were, in general, particularly backward in this regard, said the IEA.
“Facing increasing demands”
Brent crude, a benchmark used widely internationally, was 0.7% lower at $64.14 a barrel. One month ago, on 23 December, it had stood at $66.39 and three months ago, on 22 October, it had traded at $59.70.
One year ago, on 22 January 2019, it stood at $61.50.
West Texas Intermediate (WTI) was down 0.77% today at $57.93. One month ago, on 23 December, it traded at $60.52, while three month ago, on 22 October, it stood at $54.48. One year ago, WTI changed hands at $53.01 a barrel.
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While the changes over the course of the year have not been dramatic, oil bulls may be nervous about trading patterns that show the 12-monthy highs of $74.57 for Brent and $66.30 for WTI were seen on 24 and 23 April respectively, while the lows were more recent, of $56.23 for Brent and $51.09 for WTI, both on 7 August.
This may suggest any momentum in the price is in a downward direction.
In its report entitled: “The oil and gas industry in energy transitions”, the IEA said: “The oil and gas industry is facing increasing demands to clarify the implications of energy transitions for their operations and business models, and to explain the contributions that they can make to reducing greenhouse gas emissions and to achieving the goals of the Paris Agreement.
“But the core question, against a backdrop of rising GHG [greenhouse gas] emissions, is a relatively simple one: should today’s oil and gas companies be viewed only as part of the problem, or could they also be crucial in solving it?”
Global warming has been top of the agenda at the World Economic Forum in Davos, with President Donald Trump at loggerheads with the majority of delegates in the Swiss resort in dismissing fears of climate change.
Rising demand for energy from population growth
The IEA report identifies three key points: “First, the prospect of rising demand for the services that energy provides due to a growing global population – some of whom remain without access to modern energy – and an expanding global economy.
“Second, the recognition that oil and natural gas play critical roles in today’s energy and economic systems, and that affordable, reliable supplies of liquids and gases (of different types) are necessary parts of a vision of the future.
“And last but far from least, the imperative to reduce energy-related emissions in line with international climate targets. These elements may appear to be in contradiction with one another, but this is not necessarily the case.”
It concludes: “The analysis in this report highlights [the need for]…the oil and gas industry [to take] the necessary steps. As such, it opens a way – which some companies are already following – for the oil and gas industry to engage with the ‘grand coalition’ that the IEA considers essential to tackle climate change.”