Global oil market faces surplus in 2019 as demand growth slows

by Ben Pena November 16, 2018, 0:35
Global oil market faces surplus in 2019 as demand growth slows

Kazakhstan said on Tuesday its oil output rose 4.8 per cent to 74.5 million tonnes in the first 10 months of 2018, equivalent to 1.82 million bpd.

USA light crude fell $2.15, or 3.7 per cent, to $57.78, hitting its lowest level since December 2017.

American fingerprints are all over oil's record losing streak that's plunged prices into a bear market. Trump further dampened the effects of OPEC's verbal interventions in his tweet urging Saudi Arabia to keep pumping crude.

"This tweet certainly did not help prices", ING commodities strategist Warren Patterson said. The group's strategy is to lower oil inventories to their five-year average.

Capital Economics said it was clear that "fears over excess supply in the oil market are starting to build".

Opec now expects world demand to grow 1.29m barrels a day next year, about 70,000 barrels a day lower than last month's forecast.

"Increased supply from OPEC members of the Vienna Agreement saw compliance in October ease to 105%, the lowest since September 2017", the report read.

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"We are talking about a cut from everyone, including Nigeria and Libya because their production has exceeded the cap in recent months", one source said.

The IEA also cut its forecast for demand for OPEC crude by 300,000 bpd in 2019.

We remember that the oil price was sharply rising in the same way, now it is going down.

OPEC faces potential challenges from various fronts, including members Iraq and Nigeria, both of whom have clearly stated their intention to increase production in 2019; meanwhile, Alexander Novak, energy minister for Russian Federation, reiterated a familiar message to media on Wednesday, that no emergency action is warranted to stem a decline in oil prices.

Oil prices started retreating on Tuesday after US President Donald Trump flayed Saudi Arabia's call for production cuts and pressed oil cartel OPEC for lower prices based on supply.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that the kingdom will reduce exports by around 500,000 barrels a day from November to December. The IEA estimates total U.S. oil supply will rise by 2.1 million bpd this year and another 1.3 million bpd in 2019, from a current record of more than 11 million bpd. USA crude inventories probably rose 3.2 million barrels last week, according to the median estimate of analysts in a Bloomberg survey ahead of government data scheduled for release on Thursday.

Since early October, oil prices have lost around a quarter of their value as supply soars just as demand is expected to slow down along with an economic downturn. Nervous oil traders have not even been calmed by Saudi Arabian efforts to cut shipments by a half million barrels a day.

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