OPEC cuts 2019 oil demand forecast on global slowdown

OPEC cuts 2019 oil demand forecast on global slowdown

Looking forward, oil could continue to rise, courtesy of falling OPEC and Venezuelan supplies.

"The production losses to start 2019 are already larger than we expected", Goldman says, noting that more disruptions could be coming, due to the USA sanctions on Venezuela's oil industry.

The IEA raised its estimate of growth in crude supply from outside the Organization of the Petroleum Exporting Countries to 1.8 million bpd in 2019, from 1.6 million bpd previously.

U.S. crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the Energy Information Administration.

The IEA said that compliance with the so-called Vienna Agreement was 86 percent by OPEC states, with Saudi Arabia, UAE and Kuwait cutting by more than promised.

OPEC is partnering with 10 non-member nations, including Russian Federation, to keep 1.2 million bpd off the market. Russian Federation had also agreed to cut 230,000 barrels a day in production over the same period, but now is just down 90,000 barrels a day.

Also pressuring oil prices were sanctions that U.S. President Donald Trump implemented on Venezuela's oil exports in recent weeks, which has reduced supply from the global market. "With economic momentum expected to slow in the current year ... this makes economic developments in the major consuming nations a key factor to monitor going forward".

He added that markets were amply supplied due to "adequate global oil inventories, the prospect of weakened demand tied both to US-China trade and broader economic concerns, the approach of seasonal refinery maintenance - when crude oil demand declines - and an influx of new supply from the United States and elsewhere".

The cartel has joined forces with 10 non-member nations including Russian Federation to trim output to avoid a repeat of the 2014 crash when prices dove to below $30 a barrel - down from over $100 - due to a glut in supplies and weakening global demand.

As of writing, Brent is trading at $63.06 per barrel, representing a 1 percent gain on the day.

"Energy commodity prices were mixed in January".

The country's average heavy crude price was also reported to be $56.29 since beginning of 2019 up to the report's publishing day.

At the same time, major countries within OPEC are eyeing worldwide expansion for the first time. Prices climbed as much as 3 percent in London on Tuesday after OPEC data showed it made a strong start to the reductions and Saudi Energy Minister Khalid Al-Falih told the Financial Times the kingdom would cut even deeper.

The company has built a substantial worldwide "downstream" presence in refining, with...

"In quantity terms, in 2019 the USA alone will grow its crude oil production by more than Venezuela's current output", the IEA said. OPEC and other countries will either have to continue curbing extraction to maintain prices in the future or accept an energy independent US and the likely oversupply of energy that would bring to the market.

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