Global oil supply will outpace demand throughout 2019, as a relentless rise in output swamps growth in consumption that is at risk from a slowing economy, the International Energy Agency (IEA) said on Nov. 14.
In its monthly report, the Paris-based IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bbl/d) and 1.4 million bbl/d, respectively, but cut its forecast for non-OECD demand growth, the engine of expansion in world oil consumption.
For the first half of 2019, based on its outlook for non-OPEC production and global demand, and assuming flat OPEC production, the IEA said the implied stock build is 2 million bbl/d.
Output around the world has swelled since the middle of the year, while an escalating trade dispute between the U.S. and China threatens global economic growth.
On Nov. 14, three sources familiar with the matter told Reuters that OPEC and its partners are discussing a proposal to cut oil output by up to 1.4 million bbl/d for 2019 to avert an oversupply that would weaken prices.
Since early October, the oil price has fallen by a quarter to below $70 a barrel, its lowest in eight months, which may protect demand to an extent, the IEA said.
"While slower economic growth in some countries reduces the outlook for oil demand, a significant downward revision to our price assumption is supportive," it added.
The agency raised its forecast for oil output growth from countries outside OPEC to 2.4 million bbl/d this year and 1.9 million bbl/d next year, vs. its previous estimate of 2.2 million bbl/d and 1.8 million bbl/d, respectively.
The U.S. will lead output growth. The IEA estimates total U.S. oil supply will rise by 2.1 million bbl/d this year and another 1.3 million bbl/d in 2019, from a current record of more than 11 million bbl/d.
OPEC crude output rose by 200,000 bbl/d in October to 32.99 million bbl/d, up 240,000 bbl/d on a year ago, as losses of 400,000 bbl/d from Iran and 600,000 bbl/d from Venezuela were easily offset by increases from others, such as Saudi Arabia or the United Arab Emirates.
"Next year, there is expected to be even less need for OPEC oil due to relentless growth in non-OPEC supply," the IEA said, adding that it had cut its forecast for demand for OPEC crude by 300,000 bbl/d to 31.3 million bbl/d in 2019.
Inventories of oil in OECD countries rose by 12.1 million barrels in September to 2.875 billion barrels, the IEA said, adding that for the third quarter as a whole, stocks rose 58.1 million barrels, or at a rate of 630,000 bbl/d, the biggest increase since 2015.
Grayson Mill Energy, a Houston-based E&P company backed by EnCap Investments, will acquire Equinor’s interests in the Bakken field for a total consideration of around $900 million.
The review, led by a PWC accountant Eli Moe-Helgesen, is based on more than 120 interviews and documents dating back to 2005, Equinor said.
Norwegian energy company Equinor is shelving plans for a LNG development in Tanzania, arguing it would not be sufficiently profitable, but could revive the project at a later date, it said on Jan. 29.