20 November 2018, Sweetcrude, Lagos — Oil price dropped to $66.37 a barrel on Tuesday, down 42 cents (0.6 percent) from the last close as the market expects a further cut from the Organization of the Petroleum Exporting Countries, OPEC.
A recent report by Reuters claims the organization will no longer cut production by 1 million barrels as earlier speculated but by 1.4 million barrels per day.
U.S. West Texas Intermediate, WTI crude futures were at $56.94 per barrel, 26 cents, or 0.5 percent, below their last settlement, while OPEC’s daily basket price stood at $66.00.
Oil prices have been down since October due to oversupply fueled by the shale boom in the U.S, coupled with low demand.
U.S. crude oil production grew by almost 25 percent this year to 11.7 million barrels per day, bpd.
Last week, the Energy Information Administration, EIA said the U.S. crude oil output is expected to hit a record 7.94 million b/d 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 International Energy Agency, IEA on Monday warned OPEC and other producers of the “negative implications” of supply cuts.