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The Organization of Petroleum Exporting Countries (OPEC) on Friday presented a bleak outlook for the oil market for the remainder of 2019, as economic growth slowed, highlighting the challenges of 2020, as rival producers pumped more oil. of crude oil, justifying the maintenance of an agreement led by "OPEC" to limit supplies.
In a monthly report, OPEC lowered its oil demand growth forecast for 2019 by 40,000 barrels a day and said the market would see a slight surplus in 2020.
The pessimistic expectation of a slowing trade dispute between the United States and China and the separation of Britain from the European Union could strengthen the arguments of OPEC and its allies, such as Russia, to maintain production cuts to boost prices. Indeed, a Saudi official has alluded to new measures to support the market.
"If the outlook for market fundamentals looks somewhat pessimistic for the rest of the year, given weak economic growth, current global trade problems and slowing oil demand, it is important to monitor closely balance the supply and demand and support the stability of the OPEC market, "says OPEC. Months to come. "
Oil briefly reduced its previous gains after the release of the report, trading at less than $ 59 a barrel.
Despite the cuts made by OPEC, oil has fallen from its peak of more than 75 dollars reached in April 2019 under pressure from trade concerns and the economic downturn.
OPEC, Russia and other producers have been implementing an agreement since 1 January to cut production by 1.2 million barrels a day. The alliance, known as OPEC +, has extended the deal until March 2020 to avoid rising inventories, which could have a negative impact on prices.
OPEC maintained its growth forecast for oil demand in 2020 at 1.14 million barrels a day, slightly higher than this year. However, the OECD said its outlook for 2020 of economic growth was facing downside risks.
"The risks of global economic growth remain bearish," the report says. "Trade-related developments in particular should be the subject of a thorough review in the coming weeks, with the possibility of a further downward revision in September".
OPEC lowered its global economic growth forecast from 3.2% to 3.1% and maintained its forecast for 2020 at 3.2% for now.
The report also indicates that oil inventories in developed countries rose in June, pointing to a trend that could reinforce OPEC concerns over a possible glut of oil.
Inventories in June exceeded the average of the last five years, an index close to that followed by the OPEC, of 67 million barrels.
This comes despite OPEC + production cuts and an additional unintended loss of production from Iran and Venezuela, two OPEC members subject to US sanctions.
The report shows that "the OPEC" reinforced its cuts in July. According to data compiled by OPEC from secondary sources, production in the 14 countries of the Organization of Petroleum Exporting Countries has decreased by 246,000 barrels per day compared to June, for 1994. to 29.61 million barrels a day as Saudi Arabia reduced its supply.
OPEC and its partners have been supplying supplies since 2017, helping to eliminate the overabundance of supplies between 2014 and 2016.
This policy provides for continued support for American shale oil and the supply of other competitors, and the report suggests that the world will need much less oil than OPEC all year next.
OPEC said demand for its oil would average 29.41 million bpd next year, down 1.3 million bpd from this year.
But he has raised the forecast for 2020 by 140,000 barrels per day compared to last month's forecast.
The report says that there will be a supply surplus of 200,000 barrels a day by 2020 if OPEC continues to pump oil at the rate recorded in July, the rest of the factors remaining equal. Last month's report indicated a larger surplus of more than 500,000 barrels a day.
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