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OPEC cuts forecast for global oil demand growth in 2019

Gasoil News - Published on Tue, 16 Oct 2018

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Crude Oil Price Movements: In September, the OPEC Reference Basket increased sharply by almost 7%, or USD 4.92 m-o-m, to average $77.18/b the highest since October 2014. Crude oil futures prices also increased for the month, mainly supported by geo-political tension, growing concerns over a shortage in global oil supply and low US oil inventories, particularly in Cushing, Oklahoma. ICE Brent was $5.27 higher at $79.11/b compared with the previous month, NYMEX WTI was up $2.24 at $70.08/b and DME Oman increased by $6.08 to $78.75/b. Year-to-date (y-t-d), ICE Brent was $20.23 higher at $72.74/b, NYMEX WTI increased by $17.43 to $66.79/b and DME Oman was up $19.25 at $70.48/b, compared to the same period a year earlier. The Brent-WTI spread widened to average $9.02/b for the month. Speculative net long positions ended mixed, significantly higher for ICE Brent, while lower for NYMEX WTI. As for market structure, the backwardation in Dubai expanded sharply in September, while that of WTI eased. The Brent market structure flipped into backwardation amid concerns over a shortage global oil supply. Apart from Asian grades, the global sour discount to sweet crudes decreased due to an anticipated tightening of sour crude and high availability of sweet crude.

In 2018, world oil demand growth is estimated at 1.54 mb/d, following a downward revision of around 80 tb/d from the previous month’s assessment, mainly to reflect the most up-to-date data in OECD Europe and the Middle East, as well as the latest developments in the economies of in Latin America. Total oil demand for the year is now pegged at 98.79 mb/d. In 2019, world oil demand growth is forecast at 1.36 mb/d, down by around 50 tb/d from last month’s projections, mainly reflecting adjustments in the economic projections for Turkey, Brazil and Argentina. As a result, total world oil demand is anticipated to reach 100.15 mb/d. Oil demand growth is projected to be driven by Other Asia, led by India, followed by China, and OECD America. In 2019, OECD demand is forecast to grow by 0.25 mb/d, while non-OECD countries will drive oil demand growth by adding an estimated 1.11 mb/d.

Non-OPEC oil supply growth in 2018 is estimated at 2.22 mb/d, an upward revision of 0.20 mb/d from the previous month’s assessment. The US, Canada, Kazakhstan and Brazil are expected to be the main drivers for y-o-y growth, while Mexico, Norway, Indonesia and Vietnam will show the largest declines. Total nonOPEC supply for 2018 is now estimated at 59.77 mb/d. Non-OPEC oil supply growth in 2019 is forecast at 2.12 mb/d, representing a downward revision of around 0.03 mb/d from last month’s projections. The US, Brazil and Canada are the main growth drivers, while Mexico, Norway, Indonesia and Vietnam are expected to see the largest declines. The 2019 non-OPEC supply forecast remains subject to many uncertainties, with potential skewed to the upside. Non-OPEC supply is forecast to average 61.89 mb/d for the year. OPEC NGLs in 2018 and 2019 are expected to grow by 0.12 mb/d and 0.11 mb/d to average 6.36 mb/d and 6.47 mb/d, respectively. In September, OPEC crude oil production increased by 132 tb/d to average 32.76 mb/d, according to secondary sources.

Demand for OPEC crude in 2018 is estimated at 32.7 mb/d, 0.8 mb/d lower than the 2017 level. In 2019, demand for OPEC crude is forecast at 31.8 mb/d, around 0.9 mb/d lower than the estimated level in 2018.

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Posted By : Nanda Koijam on Tue, 16 Oct 2018
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