As the world continues to…
The global push towards renewable…
Surging production from the world’s biggest oil producers have more than offset Iranian and Venezuelan supply losses, while demand growth in some developing markets is slowing, pointing to a global oil oversupply next year, the International Energy Agency (IEA) said in its Oil Market Report on Wednesday.
“In 1H19, based on our outlook for non-OPEC production and global demand, and assuming flat OPEC production (i.e. losses from Iran/Venezuela are offset by others), the implied stock build is currently 2 mb/d,” the IEA said.
Production from both OPEC and outside OPEC has been soaring in recent months, more than offsetting the losses from Venezuela’s plunging output and the U.S. sanctions on Iran. On the demand side, the IEA kept its forecasts of oil demand growth at 1.3 million bpd in 2018 and 1.4 million bpd in 2019, but lowered its 2019 expectations for demand growth in non-OECD countries, the developing nations, many of which drive demand growth.
“Oil demand is slowing in several non-OECD countries, as the impact of higher year-on-year prices is amplified by currency devaluations and slowing economic activity,” the Paris-based agency said in its report, revising down its non-OECD demand forecast by 165,000 bpd for 2019.
Yet, the IEA kept its global demand growth forecasts unchanged from last month because “a weaker economy is largely offset by lower oil prices.”
While the economic growth outlook is now more clouded than before and demand in some developing nations is slowing, global oil supply is surging, with Saudi Arabia, Russia, and the U.S. more than offsetting losses from Iran and Venezuela. The world’s oil production in October rose by 2.6 million bpd compared to October 2017.
Related: Canadian Oil Producer Calls For Production Cap Amid Record Low Prices
Non-OPEC output is expected to grow by 2.4 million bpd this year and 1.9 million bpd next year, according to the IEA.
OPEC’s crude oil production jumped by 200,000 bpd last month to 32.99 million bpd, which was 240,000 bpd higher from a year ago.
However, demand for OPEC crude is expected to drop to 31.3 million bpd in 2019, which is 1.7 million bpd below the cartel’s current production, the IEA said.
Global inventories have also been building over the past four months. Higher production and the U.S. waivers to Iranian oil customers imply a stock build of 700,000 bpd in the fourth quarter.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.