Published: Wed, December 19, 2018
Finance | By Kristine Clayton

OPEC predicts a decrease in oil supplies from non-OPEC countries

OPEC predicts a decrease in oil supplies from non-OPEC countries

The main contribution to the growth of supply was made by the U.S., Canada, Russia and Kazakhstan.

That should be enough to give the market a supply deficit by the second quarter of next year, if OPEC and the other large producers stick to their deal, the International Energy Agency said in its monthly Oil Market Report on Thursday. It settled at $52.15 a barrel on Wednesday.

Crude oil prices have also been supported by OPEC-led supply curbs announced last week, although gains were capped after the producer group lowered its 2019 demand forecast.

Demand continues to struggle with oversupply, keeping crude barrel prices at uncomfortably low levels. Oil demand growth in Asian emerging markets remains in focus as weaker local currencies and higher crude prices could weigh on countries' purchasing and consuming power, Malaysia's state-owned energy company Petronas cautioned this week.

U.S. crude inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell by almost 822,000 barrels in the week through Dec 11, traders said, citing data from market intelligence firm Genscape. Prices increased 65 cents to $51.65 on December 11, after posting a 3.1% drop in the previous session. The analysts noted that global oil spare capacity is running at around a 10-year low.

Oil prices steadied on December 13, under pressure from high inventories but buoyed by a drawdown in USA crude stockpiles and indications that the trade war between the United States and China may be easing.

EIA expects that US crude oil production will average 10.9 million barrels per day in 2018, up from 9.4 million barrels per day in 2017, and will average 12.1 million barrels per day in 2019.

The Organization of the Petroleum Exporting Countries and other big producers, including Russian Federation, said last week they would try to trim surplus supply, agreeing to cut production by a total of 1.2 million barrels per day (bpd). But Goldman Sachs has a much darker forecast, expecting the slow down to less than 2 percent by the end of next year, one of its senior strategists told CNBC on Monday. "If the market needs to see stockdraws first, it could be a couple of months".

OPEC said on Wednesday that demand for its crude in 2019 would fall to 31.44 million bpd, 100,000 bpd less than predicted last month and 1.53 million bpd less than it now produces. Brent is trading around $60 as of December 12.

"At this point, the OPEC+ cuts appear to have merely put a floor under prices", Societe Generale analyst Michael Wittner said in a note. WTI was at $51.55, up roughly half a percent.

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