Published: Wed, February 13, 2019
Business | By Eloise Houston

OPEC cuts 2019 oil demand forecast on global slowdown

OPEC cuts 2019 oil demand forecast on global slowdown

Brent crude futures have risen 20 percent in 2019 to around $63 a barrel, but most of that increase took place in early January. Since January 1, an OPEC-led group has been cutting at least 1.2 million barrels per day from production in an effort to trim the global supply and stabilize prices.

The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that it had cut its output by nearly 800,000 bpd in January to 30.81 million bpd.

Meanwhile, Barclays bank added, "Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the US sanctions".

USA restrictions on Venezuela's energy sector should remove some 330,000 bpd in supply this year, according to Goldman Sachs.

However, rising U.S. oil production, fighting near Libya's main oilfield, sanctions on Venezuela and suspense over whether Washington will grant more waivers to import Iranian oil leave markets unsure about broader supply. The EIA, however, added a note of caution that USA production would be capping oil price gains.

Additionally, the International Energy Agency said energy market participants may be able to adjust to US sanctions against Venezuela's crude industry.

US sanctions on Iran and Venezuela, together with OPEC's output cuts, have therefore removed mostly medium and heavy oils from the market, leaving lighter grades relatively unaffected.

"Even so, headline benchmark crude oil prices have hardly changed on news of the sanctions".

If refiners are unable to source enough heavy and extra heavy crude, they will buy the next best alternative, in this case medium density crudes, so the impact of sanctions is rippling through the entire oil market.

In the United States, crude inventories fell by 998,000 barrels in the latest week, trouncing forecasts for a rise of 2.7 million barrels, according to data from industry group the American Petroleum Institute on Tuesday.

Gasoline inventories for the same period rose 746,000 barrels.

Saudi Aramco is the world's biggest oil company, producing ten million barrels of oil a day and managing 260 billion barrels in reserves.

Responding to the market concerns about potential oil demand as producers try to reverse massive dips in price at the end of 2018, Falih assured that the oil market is on the right track and will soon return to its balance.

Helping to keep a lid on the market are adequate global inventories, the prospect of weakened demand tied both to U.S.

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