Oil plunges economic outlook, but cuts by OPEC continue to support

SINGAPORE (Reuters) – Oil prices fell early Monday, weighed down by worries about a global economic slowdown likely to weigh on fuel consumption.

However, crude markets remain largely supported by supply cuts led by the OPEC group of producers and by the aggressive sanctions taken by the United States against Iran and Venezuela.

Brent crude futures were at $ 67.03 per barrel at 00:53 GMT, down 13 cents (0.2%) since their last close, but not far off $ 68.14 per barrel. in 2019 last week.

West Texas Intermediate (WTI) futures in the United States were $ 58.37 per barrel, down 15 cents or 0.3% from their latest settlement, and close to their peak of 58.95 dollars in 2019 compared to the previous week.

"The biggest downside risk to our view of the oil price is weak demand driven by slower economic growth. Our baseline scenario is that global oil demand will grow by 1.3 million barrels per day (bpd) by 2019 … A synchronized global slowdown in growth could bring global demand growth to less than 1 million barrels a day. bpj, "said Monday badysts Bernstein Energy.

Despite this, oil prices have risen about a quarter since the beginning of the year with US sanctions against Iran and Venezuela, and like the Organization of the Petroleum Exporting Countries (OPEC) and non-oil allies. affiliates like Russia – known as OPEC + – are committed. retain 1.2 million barrels a day to support prices.

Saudi Arabia, the main exporter of crude oil and de facto leader of OPEC, said Sunday that the balance of the oil market was far from over, as stocks were still rising, indicating that it would take -being to increase production cuts in the second half of 2019.

Russia also said that production cuts would remain in place until at least June.

Analysts said the cuts to OPEC + would lead to a reduction in oil stocks.

"We expect stocks to decline with the coming into effect of OPEC cuts and supply disruptions elsewhere," Bernstein Energy said in a note.

As a result, Bernstein forecast a stock draw of 37 million barrels in the first quarter for the 36 member countries of the Organization for Economic Co-operation and Development (OECD), which includes most industrialized countries.

The United States, where crude oil production has risen by about 2 million barrels a day over the past year, have played a vital role in balancing supply and demand. demand in the oil markets, largely due to the shale drilling earthly boom.

But the number of rigs destined for new oil production in the United States declined in 2019 and hit its lowest level since April 2018, with 833 rigs.

Crude oil production in the United States increased again in early 2019, reaching a record 12.1 million barrels per day (bpd) in February, but production has since returned to 12 million bpd, Data from the Energy Information Administration (EIA).

Chart: Number of American oil rigs – tmsnrt.rs/2V1n5mN