Nigeria and other crude exporters face gloomy months ahead as the Organisation of Petroleum Exporting Countries (OPEC) yesterday forecast lower demand for crude next year.
The forecast came as rival producers, such as the United States, are pumping more oil, and top oil exporter, Saudi Arabia, eager to avoid a return of oversupply, has cut its production output.
The higher prices that have followed the OPEC-led deal have prompted a surge of U.S. shale and other non-OPEC suppliers.
OPEC expects non-OPEC supply to expand by 2.13 million bpd next year, 30,000 bpd more than forecast last month.
In a monthly report, the OPEC said the world will need 32.05 million barrels per day (bpd) of crude from its 15 members in 2019, down by 130,000 bpd from last month’s forecast.
The drop in demand for OPEC crude means there will mean less strain on other producers in making up for supply losses in Venezuela and Libya, and potentially in Iran as renewed U.S. sanctions kick in.
Crude LCOc1 edged lower after the OPEC report was released, trading below $73 a barrel. Prices have slipped since topping $80 this year for the first time since 2014 on expectations of more supply after OPEC agreed to relax a supply-cutting deal and economic worries.
OPEC in the report said concern about global trade tensions had weighed on crude prices in July, although it expected support for the market from refined products.
“Healthy global economic developments and increased industrial activity should support the demand for distillate fuels in the coming months, leading to a further drawdown in diesel inventories,” it said.
OPEC and a group of non-OPEC countries agreed on June 22-23 to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction by Venezuela and others pushed adherence above 160 percent.
In the report, OPEC said its oil output in July rose to 32.32 million bpd. Although higher than the 2019 demand forecast, this is up by a mere 41,000 bpd from June as the Saudi cut offset increases elsewhere.
In June, Saudi Arabia had pumped more as it heeded calls from the United States and other consumers to make up for shortfalls elsewhere and cool prices, and sources had said July output would be even higher.
But the kingdom said last month it did not want an oversupplied market and it would not try to push oil into the market beyond customers’ needs.
Rapid oil demand that helped OPEC balance the market is expected to moderate next year. OPEC expects world oil demand to grow by 1.43 million bpd, 20,000 bpd less than forecast last month, and a slowdown from 1.64 million bpd in 2018.
In July, Saudi Arabia told OPEC it cut production by 200,000 bpd to 10.288 million bpd.
Figures OPEC collects from secondary sources published in the report also showed a Saudi cut, which offset increases in other nations such as Kuwait and Nigeria.
This means compliance with the original supply-cutting deal has slipped to 126 percent, according to a Reuters calculation, meaning members are still cutting more than promised. The original figure for June was 130 percent.
OPEC’s July output is 270,000 bpd more than expected, and it expects the demand for its oil to average next year, suggesting a small surplus in the market should OPEC keep pumping the same amount if other things remain equal.
PMB Mourns Victims Of Bomb Blasts
President Muhammadu Buhari has commiserated with families of victims of bomb blasts at a viewing centre in Mandarari, Konduga local...
Govt Ready To Pay Judiciary Staff – Kogi SSG
With the recent payment of one-month subvention to the state judiciary, Kogi State government has said that it is ready...
FG Assures ILO Of Moving Workers Out Of Poverty
The federal government yesterday assured global leaders attending this year’s International Labour Conference (ILC) holding in Geneva, Switzerland that it...
Cleric Tasks Christians On Thanksgiving
Christians across the world have been charged to imbibe the spirit of thanksgiving, supplication and adoration to God as a...
Police Deny Discovery Of Arms In Adamawa Poly Mosque
Adamawa State Police Command, have denied reports that arms was allegedly discovered in the Mosque inside the State Polytechnic Yola...
US-China Trade War Plunges Huawei Smartphone Sales By 40%
Huawei founder Ren Zhengfei has said international sales of the Chinese telecoms giant’s handsets have sunk 40% in the past...
Former Egyptian President Morsi Dies In Court
Egypt’s deposed President,Mohamed Morsi has died following a session in court, a state-run television station and newspaper reported yesterday. Morsi,...
POLITICS18 hours ago
APC Kicks As Bauchi Govt Suspends Inauguration Of 9th Assembly
COVER STORIES7 hours ago
Fear Grips Lawmakers As FG Begins Probe Of Constituency Projects
NEWS22 hours ago
1 Killed, 6 Vehicles Destroyed As Kona, Fulani Clash.
NEWS15 hours ago
Taraba Govt Deny Imposing Curfew On Jalingo.
AFRICA16 hours ago
Former Egyptian President Morsi Dies In Court During Sitting
NEWS21 hours ago
Windstorm Destroys Over 1000 Houses In Zamfara LGA
FOOTBALL24 hours ago
PSG Consider Neymar Sale As Club Chairman Warns To Players
NEWS3 hours ago
EDHA Inaugurated, Okiye Emerges Speaker