Global oil market faces surplus in 2019 as demand growth slows

Global oil market faces surplus in 2019 as demand growth slows

Global oil market faces surplus in 2019 as demand growth slows

Initially Saudi Arabia and other OPEC members upped production, as was the case in similar circumstances in the past, leaving oil importers such as India are seeking to source supply from further afield and replacing Iranian crude with supply from the likes of west Africa, Brazil and the Caribbean.

Iledare said: "By allowing some countries to buy crude from Iran, however, small it may be, the United States government has reduced the pressures, which the sanction would have on the global oil market and members of OPEC".

Oil clung to its rebound as tension over US sanctions against Saudi Arabia overshadowed a jump in American crude stockpiles. The sanctions, which went into effect on November 5, would functionally have cut off or penalized importers of Iranian oil, and judging from the runup in prices before this month, it was nearly as though investors thought Iran's exports would drop to zero - which they never would have.

The prior estimate was 2.2 million bpd and 1.8 million bpd, respectively. An industry report was said to show United States stockpiles rose 8.8 million barrels last week, more than double the increase forecast in a Bloomberg survey before government data due on Thursday. The only question is by how much the group will be reducing. Saudi Arabia said that it alone would slash 500,000 bpd in December.

"Initial optimism stemming from OPEC and their plans to cut oil production had been rebuffed by President Trump, who stated that he hopes, Saudi Arabia and OPEC would not cut production, adding that oil prices should be much lower", DailyFX analyst Justin McQueen told UPI. On Monday, it was the Saudis that made headlines with the promised 500,000-bpd cut, while reductions from the rest of the group were unclear. The contract sank 7.1 per cent on Tuesday, the biggest one-day decline in more than three years.

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The Opec+ alliance may cut its output by up to a million bpd next year, if needed, to balance the market, Saudi Oil Minister Khalid Al Falih said this week.

For now, Russian Federation is playing it cool.

Brent prices rose 0.6 per cent on Wednesday to $65.86 at 1115 GMT (6:13 a.m. EST).

Crude in the USA dipped below US$55 a barrel this week for the first time in a year amid renewed fears of a glut, with domestic production at record-highs, rising OPEC output and waivers meant to ease the impact of sanctions against Iran. "We have to look into long-term development, into how the price will be stabilized", he said on the sidelines of a conference in Singapore, according to Reuters. In an uncertain and volatile market, higher inventories could be "a form of insurance", the agency said, noting that the US still wants Iran's oil exports at zero, and that ongoing violence and instability in Libya, Nigeria and Venezuela keep open the possibility of more dramatic outages.

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