OPEC cuts 2019 oil demand forecast on global slowdown

Crude Oil

"China trade talks, ignoring the risks now in place from the loss of Venezuelan barrels", US bank J.P. Morgan said in a weekly note.

OPEC cut its forecast for 2019 world oil demand on Tuesday due to slowing economies and expectations of faster supply growth from rivals, underlining its challenge to prevent a surplus even as it starts new production cuts.

Despite the OPEC cuts and crisis in Venezuela, analysts said global oil markets remain well supplied.

On the broader picture, the ongoing OPEC+ agreement to curb oil production, USA sanctions against Venezuelan and Iranian oil exports and the so-called "Saudi Put" should keep a firm floor under crude prices.

US crude oil production remained at a record of 11.9 million barrels per day (bpd).

Oil prices inched up on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook.


USA sanctions on Iran and Venezuela, together with OPEC's output cuts, have therefore removed mostly medium and heavy oils from the market, leaving lighter grades relatively unaffected.

Like Iran, another founding member of the Organization of the Petroleum Exporting Countries, Venezuela's oil industry has been blighted by mismanagement, unrest, political instability, diplomatic isolation and sanctions. Analysts were looking for a build of about 2.300 million barrels. "We're getting some support added by the report despite the obvious demand drop".

And while OPEC and its allies, including Russian Federation, withhold supply, U.S. output is expected to rise further, with the Energy Information Administration saying on Tuesday that United States crude production is expected to reach 13.2 million bpd by 2020.

The U.S. Treasury's guidance, which appears deliberately unclear, has left many third-country buyers uncertain about whether they can do business with PDVSA without also falling foul of sanctions. The rally came as the International Energy Agency warned that turmoil in Venezuela could disrupt global flows of heavy crude and after Saudi Arabia said it would extend its own cuts.

The world's largest oil producers slashed their crude production last month as global economic jitters drag on oil demand forecasts.

Oil climbed for a second day as dwindling shipments from two of the world's biggest crude exporters eclipsed another big jump in USA supplies.

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