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Global oil supply tightening more quickly in 2019 - IEA

Gasoil News - Published on Mon, 17 Dec 2018

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The International Energy Agency said that the global oil market could move into deficit sooner than expected thanks to OPEC's output agreement with Russia and to Canada's decision to cut supply. The Paris-based IEA kept its 2019 forecast for global oil demand growth at 1.4 million barrels per day, unchanged from its projection last month, and said it expected growth of 1.3 million bpd this year. Uncertainty over the global economy stemming from U.S.-China trade tensions could undermine oil consumption next year, as growth in supply gathers pace.

The IEA said that "For 2019, our demand growth outlook remains at 1.4 million bpd even though oil prices have fallen back considerably since the early October peak. Some of the support provided by lower prices will be offset by weaker economic growth globally, and particularly in some emerging economies."

The Organization of the Petroleum Exporting Countries agreed last week with Russia, Oman and other producers to cut oil output by 1.2 million bpd from January to stem a build-up in unused inventories of fuel.

It said that the decision by the government of Canada's Alberta province to force oil producers to curtail supply will bring the largest reduction to crude output next year.

Alberta crude and oil sands output will drop by 325,000 bpd from January to force down vast inventories that built up because of pipeline capacity constraints. The oil price has fallen by nearly a third so far this quarter to around USD 61 a barrel, from a four-year peak close to $87 in early October.

In its previous report in November, the IEA said it expected the global oil market to remain in surplus throughout 2019. Now, it expects a deficit to materialise by the second quarter of next year, provided OPEC sticks to its supply deal.

The IEA said that "Time will tell how effective the new production agreement will be in rebalancing the oil market."

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Posted By : Nanda Koijam on Mon, 17 Dec 2018
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