By Alex Longley
OPEC sees demand for its own crude falling even faster than expected in 2019 as a slowing global economy crimps demand and rival supplies surge.
The figures, published in the cartels monthly report, underline why Saudi Arabia and some other members are talking about cutting production again. The data could bolster their case for a significant supply reduction before a crucial meeting in Vienna next month.
Global appetite for the groups crude will be about 31.5 million barrels a day next year, OPEC said. Thats 500,000 barrels a day lower than its forecast just two months ago and about 1.4 million below current production.
OPEC Secretary General Mohammad Barkindo said Monday that the resurgence of non-OPEC supply was beginning to look “alarming,” adding that he saw the need for the group and its allies to agree on a cut of 1 million barrels a day when the cartel meets next month. While no decision to reduce supply was taken over the weekend, this months report will add to the chorus of views within the group, pushing for new cuts.
“Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market,” the group wrote.
Forecasts for non-OPEC supply growth in 2019 were increased by 120,000 barrels a day. This was despite production outlooks for Canada, China, Brazil and Mexico all being revised down. The U.S. is among the nations expected to lead supply growth from outside of OPEC.
At the same time, global oil demand growth forecast was cut by 70,000 barrels a day as concerns continue to swirl over the health of emerging market economies. The non-OECD region is facing “economic adjustments” and there are still uncertainties about the overall health of the global economy.
OPECs crude production rose by 127,000 barrels a day in October, according to outside estimates compiled by the group. The biggest increases were from the United Arab Emirates and Saudi Arabia, while Iranian supply continued to tumble.
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