Mubasher: The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday cut its outlook for global oil demand for next year, asserting the necessity to sustain efforts to prevent a new market glut.
World’s oil consumption is now set to grow by 1.08 million barrels per day (bpd), 60,000 bpd lower than the prior forecast, OPEC’s research division said in its monthly oil market report (OMR).
Amid the US-China trade conflict and Brexit uncertainties, the downgrade could justify for OPEC and its allied producers including Russia, keeping the supply cuts in place or adjust the production policy.
The producer club slashed its forecast for global economic growth next year to 3.1% from 3.2%.
“The trade dispute between the US and China is ongoing, Brexit and a slow-down in Germany loom large in the European Union, the sovereign debt crisis in Argentina is dampening Latin American growth, and ongoing structural challenges in India are leading the economy to significantly lower output,” the report said.
OPEC expected that next year’s demand growth would be outpaced by robust growth in supply from non-OPEC producers including the US.
“This highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance,” the report said.
The demand for OPEC output is set to average 29.40 million bpd next year, 1.2 million bpd down from this year’s average, according to the report.
In addition, the market would be in a surplus of 340,000 bpd, should the group members maintain the current level of production.
By 11:53 am GMT, global benchmark Brent futures climbed by 0.82% to $62.89 per barrel (pb), while US Nymex crude futures jumped by 0.89% to $57.91 pb.