OPEC expects global oil demand growth to slow down next year, will oil prices fall?

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OPEC expects global oil demand growth to slow down next year, will oil prices fall?

2018-09-13 10:25:14 34 ℃

Zhongxin Jingwei client on September 13th According to Reuters Chinese website on the 13th, OPEC said in its monthly report that global oil demand will increase by 1.41 million barrels per day next year, 20,000 barrels less than last month's estimate. / Day, this is the second time the organization has lowered this estimate.

The report further suggests that the rapid demand for oil, while helping OPEC and its allies to get rid of oversupply, will tend to be moderate in 2019. OPEC said last month that global growth is facing “a lot of challenges”, but this latest report suggests that this concern has deepened: “The challenges faced by some emerging and developing economies have intensified, making the current global economic growth forecast The risk of repair."

After the announcement of the OPEC monthly report, oil prices once retreated, but then rose to above $80 a barrel, supported by expectations of further decline in Iranian exports. This level was touched earlier this year and was first seen since 2014.

OPEC and non-OPEC oil producers agreed to return to the 100% reduction in production on June 22-23. In the past few months, Venezuela and other countries cut production, making the implementation rate higher than 160%.

OPEC said in the report that after the June agreement was reached, oil production in August increased by 278,000 barrels per day to 32.56 million barrels per day. The largest increase in output was in Libya, which was exempted from the production reduction agreement. This helped offset the impact of the decline in supply in Venezuela and Iran. The economic crisis has led to a decline in Venezuela's production, and US sanctions have made oil buyers avoid Iran.

According to Reuters calculations, this means that the implementation rate of the initial production reduction agreement rose to 133%, indicating that the reduction in production by member states is still greater than the commitment level. The implementation rate in July was 126%. OPEC's August production was lower than the average demand for crude oil in the market in 2018, and significantly higher than expected demand next year, because the United States and other competitors increased supply.

OPEC said that the global market demand for OPEC crude oil in 2019 was 32.05 million barrels per day, unchanged from the previous month. This means that if OPEC maintains current production levels and other conditions remain the same, the oil market will have an oversupply of 500,000 barrels per day.

Reuters pointed out that the implementation of the OPEC-led production reduction agreement triggered an increase in oil prices, which still stimulates the organization's competitors to increase production. OPEC expects non-OPEC oil producers to increase their oil supply by 2.15 million barrels per day next year, an increase of 20,000 barrels per day from last month. The US Energy Information Association recently pointed out in its monthly report that US crude oil production is expected to increase by 840,000 barrels per day next year to 11.5 million barrels per day. (Zhongxin Jingwei APP)

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