Global oil market faces surplus in 2019 as demand growth slows

Nov 16, 2018, 01:00
Global oil market faces surplus in 2019 as demand growth slows

Brent crude oil futures were last up 63 cents on the day at $66.75 a barrel at 1454 GMT, while US crude futures rose 38 cents to $56.63.

Futures in NY fell were little changed after recovering slightly on Wednesday from a 17.6% slide over the previous 12 sessions.

But since May, Opec+ have ramped up output while at the same time the U.S. continued to grow its oil production, which reached a record of 11.6 million bpd earlier this month. "OPEC NGLs in 2018 and 2019 are expected to grow by 0.10 mb/d and 0.11 mb/d to average 6.34 mb/d and 6.45 mb/d, respectively".

What has been made apparent by OPEC and the IEA is that oil demand growth is slowing, while oil supply, most notably from the U.S. is rising to record levels at a rapid rate.

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According to him, the United States imposed the sanction on Iran with some measures of flexibility by granting waivers to countries that buy crude from Iran.

The sharp drop in prices was seen after US President Donald Trump tweeted same Monday that Saudi Arabia and OPEC should not cut production to reduce supply.

"Oil production in Russian Federation has been on the rise in recent years, by around 100,000 barrels per day each year, and it will continue to do so in future".

West Texas Intermediate for December delivery traded at $56.23 a barrel on the New York Mercantile Exchange, down 2 cents, at 16:41 in Tokyo. Futures in NY were 0.8pc higher yesterday morning after plunging 7.1pc in the previous trading session, in the biggest one-day drop in more than three years.

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He said China, India and five other countries are allowed to buy some barrels of oil from Iran, adding that the development suggested that the U.S. did not outrightly ban those countries from buying Iranian crude. The global benchmark crude traded at a US$9.68 premium to WTI for the same month.

There is no need to take any action to halt the decline of oil prices that started a month ago, even though it accelerated sharply yesterday, with both Brent and WTI shedding 7 percent and more inside a day, Russia's Energy Minister Alexander Novak said, as quoted by Reuters. The talks are preliminary, and the size of the final cut will largely depend on the starting point they use, said one of the people.

Brent was trading at $65.54 a barrel, following its largest one-day loss since July 2018.

Financial firms hedging the risk incurred by selling put options to oil producers generated added downward pressure when prices fell toward option strikes, Goldman Sachs said in a note. One aspect that might be in play is the amount of Non-Opec oil production with United States shale production increasing to record levels for next year. The industry-funded American Petroleum Institute will publish its weekly tally later Wednesday. Analysts predict a rise of 3.2 million barrels, according to a Bloomberg survey. During the week-ending November 2, the API reported that US crude stocks climbed by 7.8 million barrels.

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