Global oil market to lapse into surplus in 2019

Saudis scramble to stop oil price slide

Trump appeared to criticize the announcement in a Monday tweet: "Hopefully, Saudi Arabia and OPEC [Organization of the Petroleum Exporting Countries] will not be cutting oil production". That helped send prices lower. Price is now moving through and beyond the 100 EMA and 55.00 looks a good long term place for a pause given the support that is there.

In its report released yesterday, OPEC stated: "In 2018, oil demand growth is anticipated to increase by 1.50 mb/d y-o-y, a downward revision from the previous month of 40 tb/d, mainly due to weaker-than-expected oil demand data from the Middle East and, to a lesser extent, China during 3Q18".

Worldwide benchmark Brent crude oil futures were up 51 cents at $65.08 per barrel by 2:29 p.m ET.

On Tuesday, OPEC said in its monthly report that world oil demand in 2019 would rise by 1.29 million barrels per day (bpd), 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.

Novak told media in Singapore that Russian Federation had been pumping less oil since the beginning of the month after a record-high production rate of 11.41 million bpd last month, with the daily cut at 20,000 barrels.

The crude price slide accelerated this week with U.S. futures suffering their steepest one-day loss in more than three years.

With the United States now the world's top oil producer ahead of Saudi Arabia and Russian Federation, there are indications that traders will keep selling crude at lower prices as a result of oversupply.


"It's like a run on the bank", said Mr Phil Flynn, analyst at Price Futures Group in Chicago.

Brent prices rose 0.6 per cent on Wednesday to $65.86 at 1115 GMT (6:13 a.m. EST).

Capital Economics said it was clear that "fears over excess supply in the oil market are starting to build". He told the Straits Times that "it's getting to the point where it doesn't seem to be about fundamentals anymore, but a total collapse in price".

Opec has been making increasingly frequent public statements that it will start withholding crude in 2019 to tighten supply and prop up prices.

During its last meeting, the Organisation of Petroleum Exporting Countries (OPEC) and its allies led by Russian Federation acknowledged that an oversupply of oil in the market is imminent in 2019.

A supply cut of up to 1.4 million bpd was one of the options discussed by energy ministers from Saudi Arabia, non-OPEC Russia and other nations at a meeting in Abu Dhabi on Sunday, the sources said.

Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.

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