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OPEC revised down on Wednesday its forecast for global oil demand growth this year by 80,000 bpd to 1.02 million bpd, citing weaker demand in the first half and expectations of slower economic growth for the rest of the year.
In its closely watched Monthly Oil Market Report, the cartel also trimmed its forecast for global oil demand growth in 2020 by 60,000 bpd to 1.08 million bpd, chiefly due to changes to the economic outlook for next year.
Demand for OPEC crude for 2019 was also cut—by 80,000 bpd to 30.6 million bpd, which would be 1 million bpd lower than the 2018 level. Demand for OPEC crude for 2020 is now seen at 29.4 million bpd, around 1.2 million bpd lower than the expected level for 2019.
OPEC’s revised estimates are now closer to what many analysts and investment banks predict—that global oil demand growth this year won’t exceed 1 million bpd by much.
Just yesterday, the EIA cut its oil demand growth forecast to 900,000 bpd, down by 100,000 bpd from the August forecast, noting that if the outlook materializes, this year would be the first year since 2011 in which demand growth hasn’t exceeded 1 million bpd.
OPEC said that weaker oil demand growth, which is expected to be outpaced by the strong growth in non-OPEC supply, “highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance.”
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On the supply side, OPEC’s official figures for August production confirmed earlier survey estimates that the cartel boosted its production last month.
OPEC raised its production by 136,000 bpd from July to 29.741 million bpd last month, driven by higher output in Saudi Arabia, Nigeria, and Iraq. The Saudis lifted production by 118,000 bpd to 9.805 million bpd, but still more than 500,000 bpd below their quota under the deal. Iraq, OPEC’s second-largest producer that has always had issues with keeping within its cap, lifted its oil production by 43,000 bpd to 4.779 million bpd—well above its 4.512-million-bpd quota.
Meanwhile, production in Venezuela plunged by another 43,000 bpd to average just 712,000 bpd in August, according to OPEC’s secondary sources.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.