Crude Oil: OPEC cut its oil demand forecast for 2019, the fourth consecutive month that it has done so. The cartel now only sees demand rising by 1.29 mb/d in 2019, down another 70,000 bpd from last month’s forecast. At the same time, non-OPEC supply is expected to grow by a massive 2.23 mb/d next year, an upward revision of 120,000 bpd. “Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market,” OPEC said.
Total OPEC production jumped in October, as Saudi Arabia and the UAE more than offset the declines from Iran. Iran saw production fall by 156,000 bpd, and Venezuela suffered another 40,000-bpd monthly decline. But Saudi Arabia added 127,000 bpd and the UAE added 142,000 bpd. Combined the entire group’s production edged up by 127,000 bpd. As the market expected supplies to tighten due to Iran sanctions, the increase has helped push down crude oil prices.
OPEC is scrambling to stop the slide in oil prices. Saudi Arabia announced that it would cut exports by 500,000 bpd in December, and it is working with OPEC+ to engineer a collective cut of about 1 mb/d, which could be on the table at the upcoming meeting in Vienna in early December. The cuts are needed as the market is suddenly awash in fresh supplies. “The market now increasingly looks concerned about the prospect of too much supply,” Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer, told Reuters. |
