OPEC sees more 2019 demand for its oil as it keeps cutting output

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Tue, 2019-05-14 18:58

LONDON: OPEC said on Tuesday that world demand for its oil would
be higher than expected this year as supply growth from rivals
including US shale producers slows, pointing to a tighter market if
the exporter group refrains from raising output.
But the Organization of the Petroleum Exporting Countries, in a
monthly report, said its output fell slightly in April as US
sanctions on Iran added to the impact of an OPEC-led supply-cutting
pact.
Supply losses in OPEC members Iran and Venezuela, both under US
sanctions, have deepened the impact of the production-limiting
deal. The so-called OPEC+ group of producers meets next month to
review whether to maintain the pact beyond June.
Vienna-based OPEC trimmed its estimate of oil supply growth from
outside the group in 2019 and said the rapid rise in production of
US tight oil, another term for shale, was moderating.
“Supply growth is likely to be slower than last year amid the
expected weaker global economic growth,” OPEC said.
“US tight oil production is increasingly faced with costly
logistical constraints in terms of out-take capacity from
land-locked production sites.”
OPEC, Russia and other non-member producers are reducing output by
1.2 million barrels per day from Jan. 1 for six months. The
producers meet on June 25-26 to decide whether to extend the
pact.
OPEC+ returned to output cuts this year due to concern that an
economic slowdown would produce a supply glut. But demand has
weakened no further for now, as OPEC kept its estimate of global
growth in oil use in 2019 steady at 1.21 million bpd.
However, in a development that may raise OPEC concern, the report
said inventories in developed economies rose in March, after
falling in February.
Stocks in March exceeded the five-year average — a yardstick OPEC
watches closely — by 22.8 million barrels, more than in
February.

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Source: FS – All-News-Economy
OPEC sees more 2019 demand for its oil as it keeps cutting output