OPEC expects demand for the cartel’s crude in 2019 at almost 1 million barrels a day (MMbbl/d) less than last year as supply is expected to outweigh demand, something that has forced global producers to enact output curbs.
In its monthly oil market report, OPEC said production from outside of the cartel is forecast to grow by a robust 2.1 MMbbl/d this year—a small downward revision—to average almost 64.2 MMbbl/d.
U.S. production at record levels combined with concerns about global oil demand growth, amid anxiety about the fallout of the US-China trade spat, has helped to send oil lower in recent weeks.
Growth in non-OPEC supplies will outpace the rate at which OPEC expects global oil demand to grow this year, at around 1.3 MMbbl/d to 100.1 MMbbl/d.
As OPECand Russia-led supply curbs take effect from January and as global stock markets stabilise compared with the turmoil in December, Brent crude — the international oil benchmark—has staged a recovery towards $61 a barrel.
Opec said on Jan. 17 that should a further improvement in financial markets materise “this could provide further support to ongoing increases in non-Opec supply”.
In December 2018, OPEC crude oil production fell by 751,000 bbl/d to average nearly 31.6 MMbbl/d, according to secondary sources, led by Saudi Arabia, Libya, Iran and the UAE.
From January OPEC and allies outside of the cartel will curb supplies by 1.2 MMbbld/ to stabilize oil prices.
Prices took a hit late last year after already feeling under pressure after the issuance of allowances to buyers of Iranian barrels by the U.S., allowing more Iranian oil on to the market than expected. This was a big factor in enabling a 40% slide in prices from a $86 a barrel in October to below $50 in December.
“Oil prices were pressured by concerns about global oversupply and deteriorating oil demand, amid high uncertainty about global economic growth, as well as weak refining margins,” OPECsaid.
In 2019, demand for OPEC crude is forecast at 30.8 MMbbl/d, excluding Qatar which announced it was leaving the group late last year. This is around 900,000 bbl/d lower than the 2018 estimate and less than what OPEC produced in December.
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