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OPEC continues to trim world oil demand growth outlooks for 2019, 2020

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OPEC continues to trim world oil demand growth outlooks for 2019, 2020

OPEC continues to scale back its projection for world oil demand growth for 2019 and 2020.

The organization said in its latest monthly report released Sept. 11 that it expects global oil demand in 2019 to grow by 1.0 million barrels per day to an average of 99.84 million bbl/d. This is down slightly from OPEC's prior monthly projection due to lower than anticipated consumption around the world as well as slower economic growth in the first half of the year.

OPEC also revised downward its 2020 global oil demand outlook. Consumption is expected to increase by 1.08 million bbl/d to an average 100.92 million bbl/d in 2020.

According to secondary sources used to track member output, OPEC's first quarter crude oil production averaged 30.5 million bbl/d, about 300,000 bbl/d higher than the call on the cartel's crude. OPEC's second quarter oil production averaged 30.0 million bbl/d, which was 500,000 bbl/d lower than the demand for its oil, the report said.

OPEC lowered its full year 2019 forecast for demand for its oil by 100,000 bbl/d, to 30.6 million bbl/d. This is 1.0 million bbl/d lower than the 2018 oil consumption level of 31.6 million bbl/d. The demand outlook for OPEC's crude in 2020 was unchanged from the August report at 29.4 million bbl/d.

Amid weak global crude oil prices, OPEC agreed July 1 to keep throttling back output by extending its 1.2 million bbl/d production cut agreement through the first quarter of 2020. In December 2018, OPEC members and other major oil producers including Russia agreed to the oil output cut, with members trimming their output by 800,000 bbl/d and non-OPEC members reducing production by 400,000 bbl/d.

Non-OPEC oil supply is expected to grow by 1.99 million bbl/d in 2019, up a tad on the month, to an average of 64.40 million bbl/d. "This slight change is attributed to upward revisions in oil production in Russia, Kazakhstan, Australia, and Canada, which outpaced the downward revision in the U.S. oil supply forecast," OPEC said.

Due mostly to this sharp change to the U.S. supply projection, non-OPEC oil supply growth in 2020 was revised down and is now expected to grow by 2.25 million bbl/d to an average of 66.65 million bbl/d.

"The 2020 non-OPEC supply forecast remains subject to many factors: oil price movements; capital spending discipline, particularly in the US; infrastructure debottlenecking in North America; drilling and completion costs and level of activities; unplanned outages; delayed start-ups; and the duration of unexpected maintenance," OPEC said.