OPEC cuts 2019 oil demand forecast on global slowdown

The Opec+ cuts are taking effect and US data is starting to reflect these changing market conditions. — Reuters  file

The cartel made the pledge previous year alongside major oil producing countries outside the cartel, including Russian Federation, to safeguard oil prices against a global economic slowdown.

This rate could rise in coming months as top exporter and OPEC kingpin Saudi Arabia voluntarily lowers supply by more than it agreed.

Compliance by non-OPEC participants was only 25 percent, however, it said.

Kazakhstan increased production, while Azerbaijan only cut 15 percent of what it had promised.

Concerns are also being raised about the sustainability of the OPEC-led supply cuts which include Russian Federation.

Overall, global supply fell by 1.4 mbd to 99.7 mbd in January, according to the IEA, which said cuts imposed by authorities in the province of Alberta in Canada, which is not party to the Vienna Agreement, also contributed to the reduction.

With OPEC engaged in supply management and the Middle East entangled in political conflicts while production outside the group surges, Bank of America Merrill Lynch said OPEC's global market share would fall as its outright output drops to 29 million barrels per day (bpd) in 2024 from 31.9 million bpd in 2018.

The sanctions on Venezuela-combined with the US sanctions on Iran and with OPEC's cuts-have been removing medium to heavy crudes from the market.

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Those fears dissipated after Washington eventually granted waivers allowing several countries to continue to import Iranian oil.

Although the US sanctions on Venezuela are creating a heavy crude crunch on the oil market, the EIA says that the sanctions are unlikely to have a significant impact on the refinery runs of the USA refiners.

In the United States, energy firms last week increased the number of oil rigs operating for the second time in three weeks, a weekly report by Baker Hughes said on Friday.

IEA figures show Venezuala's output dropping by roughly 30,000 barrels per day to 1.26 mbd.

"In quantity terms, in 2019, the US alone will grow its crude oil production by more than Venezuela's current output".

"So far, there are no signs that other producers, e.g".

Companies added 7 oil rigs in the week to February 8, bringing the total count to 854, pointing to a further rise in U.S. crude production, which already stands at a record 11.9 million bpd.

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