Rare pessimism for OPEC[/rtl]
[rtl]Release date:: 2019/8/16 17:50 • 207 times read[/rtl]
OPEC on Friday presented a gloomy outlook for the oil market for the remainder of 2019 as economic growth slowed and highlighted the challenges of 2020 as rival producers pump more crude, justifying maintaining an OPEC-led deal to curb supplies.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for oil demand growth in 2019 by 40,000 bpd to 1.10 million bpd and indicated that the market would post a slight surplus in 2020. The
pessimistic outlook is due to the slowing economy in light of the trade dispute. Between the US and China and Britain's separation from the European Union may strengthen the rationale of OPEC and allies including Russia to maintain a policy of production cuts to boost prices. Indeed, a Saudi official has hinted at further steps to support the market.
`` While the outlook for fundamentals looks somewhat pessimistic for the rest of the year, given weak economic growth, ongoing global trade problems and slowing oil demand growth, it remains important to closely monitor the balance between supply and demand and support market stability in the coming months, '' OPEC said in the report.
It is rare for OPEC to announce a pessimistic view of market expectations and trim oil gains made earlier after the report was published and traded below $ 59 a barrel.
Despite OPEC-led cuts, oil fell from its April 2019 peak of over $ 75 on pressure from trade concerns and an economic slowdown.
OPEC, Russia and other producers have been implementing an agreement since January 1 to cut output by 1.2 million barrels per day. The alliance, known as OPEC +, extended the deal until March 2020 to avoid rising inventories, which could adversely affect prices.
OPEC maintained its forecast for oil demand growth in 2020 at 1.14 million bpd, up slightly from this year. But the OECD said its outlook for 2020 economic growth faces downside risks.
"Risks related to global economic growth remain tilted to the downside," the report said.
OPEC trimmed its global economic growth forecast to 3.1 percent from 3.2 percent and kept its 2020 forecast at 3.2 percent for now.
The report also said that oil stocks in developed countries increased in June, indicating a trend that may reinforce OPEC concerns about a possible oil glut.
Inventories in June exceeded the five-year average, a benchmark closely followed by OPEC, by 67 million barrels.
This comes despite OPEC + production cuts and an additional involuntary loss in the production of Iran and Venezuela, two OPEC members subject to US sanctions.
The report showed that OPEC strengthened its cuts in July. According to data compiled by OPEC from secondary sources, output from the 14-member group fell 246,000 barrels per day from June to 29.61 million bpd as Saudi Arabia boosted supply cuts.
OPEC and its partners have been curbing supplies since 2017, helping to eliminate the glut of supply between 2014 and 2016.
That policy gives continued support to US shale oil and supplies to other competitors, and the report suggests the world will need much less oil than OPEC next year.
OPEC said demand for its oil would average 29.41 million bpd next year, down 1.3 million bpd from this year. But it raised expectations for 2020 by 140,000 barrels per day compared with expectations last month.
The report indicates that there will be a surplus of supply in 2020 by 200 thousand barrels per day if OPEC continues to pump oil at the rate recorded in July and the rest of the factors remain equal. The report last month pointed to a larger surplus of more than 500,000 barrels per day