[ad_1]
OPEC sees "somewhat bearish" prospects for the remainder of 2019, although supplies remain limited in the short term.
In its latest report, OPEC has only slightly lowered its forecast of global oil demand, bringing it down to 1.10 million barrels per day (MMb / d) in 2019, a slight decrease 0.04 Mb / d compared to the previous month. This estimate could end up being overly optimistic, and OPEC itself said the forecasts were "subject to downside risks arising from uncertainties in global economic development".
OPEC said global supply could rise by 1.97 Mb / d this year, significantly outpacing growth in demand. Nevertheless, this figure is down 72,000 b / d from a previous estimate due to lower than expected production growth in the United States, Brazil, Thailand and Norway.
Another worrying sign of excess supply in the brewing industry, OPEC said oil inventories in OECD countries rose by 31.8 million barrels in June compared to the previous month to 67 million barrels more than the average of the last five years. In other words, just as OPEC was meeting to extend the nine-month production cuts, inventories were on the rise, indicating an oversupplied market.
On a slightly positive note (for OPEC), the group revised the demand for its crude by 0.1 Mb / d for 2019 and for 2020. Nevertheless, it said that the demand for its oil, often referred to as " call for OPEC, "would drop to 29.4 Mb / d in 2020, up from 30.7 Mb / d this year.
On the basis of these figures, OPEC + expects an overabundance of stocks next year in the absence of additional measures. The group can either stay with current production levels and risk a further slowdown in the market, or accept further production cuts. Related: Strong decline in electric vehicles could delay peak oil demand
What happens next is largely outside the hands of OPEC. Recent price movements are almost entirely the result of changing feelings towards the global economy. "The yo-yoing in the oil market continues and the price of oil remains very subject to fluctuations. After slipping en masse Wednesday, Brent was again hit hard [Thursday], losing more than 3% in a few hours, "said Commerzbank Friday in a note. "The price of oil is currently at the mercy of expectations for the global economy, and is therefore caught between economic concerns and the hope that the trade dispute will end soon."
US retail sales eased some concerns on Friday, but the global backdrop remains worrisome and the steady release of data from around the world continues to point in a negative direction. Just last week, we saw the reversal of the yield curve for US Treasury bonds, the collapse of the stock market and currencies in Argentina, the volatility of oil prices and the widespread fears of a global economic recession. Related: Can renewable natural gas really compete with diesel?
Even the United States is not immune, despite generally sound data until recently. For example, Wall Street analysts have reduced their earnings outlook for the third quarter in recent weeks. "Everyone in April and early May thought that the economy would improve in the second half of the year, the trade war would somehow settle, but certainly not worsen," he said. said the executive director of Eastman Chemical, Mark Costa. last month's revenue call, as reported by the WSJ. "And now, we live in a very different world where I do not think it's true … There are not many signs of economic recovery coming in the second half."
In the end, the United States will struggle to overcome the global slowdown. The World Trade Organization (WTO) painted a bleak picture for the third quarter, saying trade volumes "should remain low". The global auto sector was hit hard this year, with a sharp contraction in China, India and Germany. The US auto industry is also starting to show signs of tension.
The problem with oil prices is that the outlook for 2020 is already quite bearish, with supply growth exceeding demand. This is the basic case right now. But the risks of economic recession continue to grow, which may further aggravate the supply.
By Nick Cunningham from Oilprice.com
More from Reading Oilprice.com:
[ad_2]
Source link