The Organisation of the Petroleum Exporting Countries, OPEC, has reversed its forecast of oil market outlook for the rest of 2019, as economic growth slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to curb supply.
In a monthly report, the OPEC, at the weekend reduced its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020.
The bearish outlook due to slowing economies amid the U.S.-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices. Already, a Saudi official has hinted at further steps to support the market.
“While the outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil demand growth, it remains critical to closely monitor the supply/demand balance and assist market stability in the months ahead,” OPEC said in the report.
Oil briefly pared an earlier gain after the report was released and was trading below $59 a barrel.
Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above $75 pressured by trade concerns and an economic slowdown.
The OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices.
Source: INDEPENDENT BUSINESS FEED