A Review of the Nigerian Energy Industry

OPEC now proposing 1.4 million barrels per day cuts

*OPEC flag.

*As EIA cuts OPEC crude demand by 300,000 bpd in 2019

OpeOluwani Akintayo

14 November 2018, Sweetcrude, Lagos — International benchmark Brent crude LCOc1 rose $1.18 a barrel to $66.65 as of 0955 GMT after a report by Reuters said OPEC and its partners are discussing how to cut output by up to 1.4 million barrels per day, bpd, and not 1mbpd as earlier proposed.

International benchmark Brent crude LCOc1 rose $1.18 a barrel to $66.65 as of 0955 GMT, having fallen as low as $65.02 on Tuesday.

Brent LCOc1 downed by $4.65, or 6.6 percent, to $65.47 a barrel, the largest one-day loss since July, according to a market report. Brent has lost 25 percent since peaking at a four-year high in early October. It now sits at levels not seen since March.

Price of Brent has fallen by 17.5 percent due to market glut worries and slowing demand.

The oil markets are witnessing uncertainty due to increasing supplies from OPEC, the U.S, Russia, and other producers, likewise concerns about low demand.

Department of Energy’s Energy Information Administration, EIA said on Tuesday that the U.S. crude oil output is expected to hit a record 7.94 million barrels per day (bpd) in December.

OPEC crude output rose by 200,000 bpd in October to 32.99 million bpd, up 240,000 bpd on a year ago.

Losses of 400,000 bpd from Iran and 600,000 bpd from Venezuela were offset after Saudi Arabia or the United Arab Emirates increased production.

“Next year, there is expected to be even less need for OPEC oil due to relentless growth in non-OPEC supply,” the IEA said, adding that it had cut its forecast for demand for OPEC crude by 300,000 bpd to 31.3 million bpd in 2019.

In its Monthly Oil Market Report, MOMR for November, OPEC revised down demand for OPEC-15 crude in 2018 by 0.1 mb/d from the previous report to stand at 32.6 mb/d, 0.9 mb/d lower than the 2017 level.

It also said demand for OPEC-15 crude in 2019 is forecast to decline by 1.1 mb/d next year to average 31.5 mb/d, around 0.3 mb/d lower than the last assessment.

In 2019, world oil demand growth is forecast to grow by 1.29 mb/d y-o-y, about 70 tb/d lower than last month’s projection, with total world consumption to reach 100.08 mb/d. The OECD region will contribute positively to oil demand growth, increasing by 0.25 mb/d y-o-y, while the non-OECD region is assumed to see larger growth by 1.04 mb/d in 2019, according to OPEC data.

Most analysts already forecast U.S. output to climb above 12 million bpd within the first half of 2019.

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