Opec warned on Tuesday about exaggerated global oil supplies, reaching 700,000 barrels a day drop in demand next year. This strengthens the view of the UAE and Saudi Arabia on reducing supply to balance the supply / demand ratio in 2019.
According to Opec's monthly report released on Tuesday, in 2019 world oil demand will increase by 1.29 million barrels per day, which is 700,000 barrels per day (BPD) less than the forecast for the previous month. However, next year, non-Opec's offer will increase by 2.23 million base points, an increase of 120,000 more than forecasted.
Saudi Arabia and the UAE said on Monday that reducing oil supplies is inevitable due to the surprise of global stocks. US President Donald Trump urged Opec not reduce supplies, with oil prices falling by 2 percent on Tuesday.
The bulk of the new supply for the next year will be gained by non-Opec members who are shipping on the market with an additional 2.33 million bpd.
The increase in oil demand in 2018 is expected to increase by 1.5 million basis points per year, down from 40,000 base points in the previous month, mainly due to lower demand in the Middle East and, to a lesser extent, in China in 2018. in the 3rd quarter of the year. Total oil demand is projected to reach 98.79 million bpd a year.
The Opec Group will meet in Vienna on December 6th to set the policy for 2019.
Anita Yadav, Emirates NBD Fixed Income Research Manager, said that the supply levels of Opec and non-Opec members continued, global GDP growth rates would continue, dollar strength, geopolitical issues and sanctions that could affect oil supplies from the region dictate oil prices next year .
Dubai Emirates NBD expects oil prices to average $ 73 per barrel in 2018.
"Our forecasts for oil prices in 2019 are similar – somewhere between $ 70 and $ 75 a barrel, which suggests that demand will increase by about 1 percent a year," she said.
Manoj Krishnan, head of private wealth for Continental Financial Services, believes that the only major issue with oil would be the impact of a trade war, which is hard to measure at the moment. "We need at least one to two quarters and see the impact on the global economy."
He predicts that technically prices in the first half of the next may reach $ 65- $ 73 a barrel before getting clear.
Jameel Ahmad, Global FX Strategy and Market Survey Manager for FXTM, said that the consensus at the OEC meeting was that oil demand next year would be about 31.5 million barrels per day, which is lower than the current world output of around 33-34 million barrels per day.
"The real output currently could be higher than these levels. In general, the market environment and oil-related conditions are still unpredictable as these conditions are changing rapidly, so the price of oil has been so volatile in recent weeks," he said.
Ahmad said that demand could be one of the key factors driving oil market volatility in the market next year.
He noted that he warned of a slowdown in economic growth, which means that next year there is less demand for oil due to the slowdown in global economic conditions, but this is not yet fully included in the oil price.
On Tuesday, the International Energy Agency predicts that oil demand will reach 2040. However, it warned that the world could face the supply crisis by insufficient investment in new production.
The IEA said that by the year 2040 there will be 300 million electric vehicles on the roads. It expects these vehicles to reduce their demand by 3.3 million barrels a day, compared to the previous projected loss of 2.5 million bpd in their latest World Energy Report.
The IEA predicted that natural gas will turn coal into the world's second largest oil source by 2030. Gas demand in the world will increase by 1.6 percent by 2040, and by now it will be 45 percent higher. It says that China will become the largest gas importer, the world's largest importer of oil and coal.
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