OPEC Cuts 2020 Oil Demand Forecast

OPEC Cuts 2020 Oil Demand Forecast

OPEC Cuts 2020 Oil Demand Forecast

US-China trade tensions and Brexit are major reasons for OPEC's less than optimistic outlook.

The share of OPEC crude oil in total global production declined by 0.1 percent to 30 percent in August 2019 compared to the previous month.

"We've been talking and talking about OPEC losing market share from their production cuts and now we're finally seeing evidence of it from the burgeoning weekly export numbers of USA crude", said John Kilduff, founding partner at NY energy hedge fund Again Capital.

OPEC, Russia and other non-members agreed in December to reduce supply by 1.2 million bpd from January 1 this year.

Global oil demand is weathering economic headwinds, the International Energy Agency (IEA) said Thursday, buoyed by lower prices brought on by abundant supply as the United States briefly dethroned Saudi Arabia as the world's top exporter.

"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. That's a big concern because even if the USA and China strike a deal to end the trade war in October, two months will not be enough time to increase demand, adding further to a potential global supply glut.

Woods Mackenzie said last month that the USA port of Corpus Christi, Texas could emerge as the country's top crude export hub over the next decade, linking three new pipelines from the Permian, the country's most prolific shale oil basin. Analysts were looking for a 1.4 million barrel draw in gasoline and a 220,000 barrel rise in distillate supplies.

Elsewhere, Saudi Arabia and Russian Federation, the leaders of the alliance undertaking crude oil supply adjustments, have said they aim for "full conformity" from all members of the super-group to curb output and boost oil prices.

Demand for OPEC crude will average 29.40 million bpd in 2020, OPEC said, down 1.2 million bpd from this year. It was the first increase this year.

OPEC, the oil producers cartel of which Saudi Arabia is an important member, is meeting on Wednesday to discuss the options after it slashed the oil demand forecast in its monthly market report for September, citing weakening growth of the global economy. Russia, Iraq and Nigeria pumped 600,000 bpd more than their allocations.

The tussle for the No. 1 slot could remain tight in the months ahead.

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