Oil prices plunge as OPEC trims demand forecast

Oil prices plunge as OPEC trims demand forecast

/ Financial News / Thursday, 22 November 2018 07:50

OPEC trimmed its global oil demand forecasts for this year and the next, as kingpin Saudi Arabia tries to cut output to bolster prices in a weakening market.

In its latest monthly report covering October, OPEC said demand is expected to increase 1.5 million barrels per day (mbd) this year, down 40 000 mbd from its previous estimate, to give a daily total of 98.79 mbd. The cartel said this reflected lower-than-expected demand in the Middle East and to a lesser degree in China.

For 2019, demand will likely grow by 1.29 mbd to 100.08 mbd – some 70 000 mbd less than in the September report. On the supply side, it said non-OPEC states are likely to increase output, led by the United States.

“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,” OPEC said.

“The recent downward revision to the global economic growth forecast and associated uncertainties confirms the emerging pressure on oil demand observed in recent months,” it added.

While US President Donald Trump has pressed OPEC to produce more oil to offset the impact of sanctions on Iran, Saudi Arabia has tried to bolster prices by cutting output, most notably under a successful 2016 accord which included Russia.

However, prices have recently come under fresh downward pressure and Riyadh had urged producers to cut output by one million barrels per day, of which it would account for 500 000 barrels.

The report, citing secondary sources, said OPEC's own October output increased by 127 000 barrels per day compared with September to total 32.90 mbd, about a third of the global total.

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