A Review of the Nigerian Energy Industry

OPEC forecast places supply higher than demand in 2019

*OPEC flag.

OpeOluwani Akintayo

16 November 2018, Sweetcrude, Lagos — The Organization of the Petroleum Exporting Countries, OPEC’s forecast says global supply will be higher than demand in 2019.

The group made the submission at the OPEC-Non-OPEC Joint Ministerial Monitoring Committee, JMMC convened in Abu Dhabi, United Arab Emirates, for its eleventh meeting on 11 November.

According to the committee which had reviewed the monthly report prepared by its Joint Technical Committee, JTC, and the short-term developments in the global oil market, including prospects, as well as scenario analysis for 2019, the 2019 prospects point to higher supply growth than global requirements after taking into account current uncertainties.

The Committee also noted that the dampening of global economic growth prospects, in addition to associated uncertainties, could have repercussions for global oil demand in 2019 – and could lead to widening the gap between supply and 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.

The JMMC acknowledged the achievements of participating producing countries of the Declaration of Cooperation, DoC and their continuous efforts in pursuing a balanced and sustainably stable global oil market, serving the interests of consumers, producers, the industry and global economy at large.

Additionally, the JMMC noted that countries participating in the DoC have achieved a conformity level of 104% in October 2018.

In advance of the scheduled meetings in December 2018, the JMMC directed the JTC to continue closely monitoring oil market conditions and further refine the scenario analysis based on updated data, with regard to options on new 2019 production adjustments, which may require new strategies to balance the market.

The next meeting of the JMMC is scheduled to take place on 5 December 2018 in Vienna, Austria.

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