Oil market oversupplied in 2019 on US production: energy watchdog

Fri, 2019-07-12 09:11

LONDON: Surging US oil output will outpace sluggish global
demand and lead to a large stock build around the world in the next
nine months, the International Energy Agency (IEA) said on
The forecasts appear to predict the need for producer club OPEC and
its allies to reduce production to balance the market despite
extending their existing pact, forecasting a fall in demand for
OPEC crude to only 28 million barrels per day (bpd) in early
“Market tightness is not an issue for the time being and any
rebalancing seems to have moved further into the future,” the IEA
said in its monthly report.
“Clearly, this presents a major challenge to those who have taken
on the task of market management,” it added, referring to the
Organization of the Petroleum Exporting Countries and producer
allies such as Russia.
The demand for OPEC crude oil in early 2020 could fall to only 28
million bpd, it added, with non-OPEC expansion in 2020 rising by
2.1 million bpd — a full 2 million bpd of which is expected to
come from the United States.
At current OPEC output levels of 30 million bpd, the IEA predicted
that global oil stocks could rise by 136 million barrels by the end
of the first quarter of 2020.
Maintaining its forecasts for oil demand for the rest of 2019 and
2020, the Paris-based agency cited expected improvement in US-China
trade relations and US economic expansion as encouraging but
flagged tailwinds elsewhere.
“There are indications of deteriorating trade and manufacturing
activity. Recent data show that global manufacturing output in 2Q19
fell for the first time since late 2012 and new orders have
declined at a fast pace,” it said.
The IEA said that markets were concerned by escalating tension
between Iran and the West over oil tankers leaving the Gulf but
that incidents in the region’s shipping lanes have been
overshadowed by supply concerns.
“The oil price impact has been minimal with no real security of
supply premium,” the IEA said. “For now, maritime operations in
the region are close to normal and markets remain calm.”
Tightened US sanctions on Iranian crude drove down Tehran’s June
exports by 450,000 bpd to 530,000 bpd, near three-decade lows.

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Source: FS – All-News-Economy
Oil market oversupplied in 2019 on US production: energy watchdog