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OPEC trims 2019 global oil demand growth outlook, sees surplus in 2020

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OPEC trims 2019 global oil demand growth outlook, sees surplus in 2020

OPEC once again trimmed its 2019 outlook for global oil demand growth while maintaining its forecast for 1.1% growth in 2020.

The organization expects global oil demand in 2019 to grow by 1.1 million barrels per day to a total of 99.92 million bbl/d, it said in its latest monthly report released Aug. 16. This is down slightly from OPEC's prior monthly projection for global oil demand to grow by 1.14 million bbl/d as it now sees lower-than-anticipated consumption from developed countries in the Americas as well as countries in Asia and the Middle East in the first half of the year.

For 2020, the organization still pegged oil demand at a growth rate of 1.14 million bbl/d, topping the 100 million bbl/d threshold to average 101.05 million bbl/d for the year.

According to secondary sources used to track member output, OPEC crude oil production in July averaged 29.61 million bbl/d. First-quarter OPEC crude output averaged 30.5 million bbl/d, about 300,000 bbl/d higher than the call on OPEC crude. OPEC's second-quarter oil production averaged 29.97 million bbl/d, which was 800,000 bbl/d higher than the demand for the organization's crude.

OPEC hiked its 2019 forecast for demand for its oil by 100,000 bbl/d, to 30.7 million bbl/d. This is 900,00 bbl/d lower than the 2018 oil consumption level of 31.6 million bbl/d. Demand for OPEC crude in 2020 was revised higher by 100,000 bbl/d from the July report to 29.4 million bbl/d.

Responding to tumbling 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 1.97 million bbl/d on the year, a monthly downward revision due to lower-than-expected oil output from the U.S., Brazil, Norway and Thailand in the first half of the year, OPEC said. In 2020, non-OPEC oil supply is called to rise by 2.39 million bbl/d to an average of 66.78 million bbl/d. The U.S., Brazil and Norway are expected to be growth drivers for the increase in non-OPEC supply.

Meanwhile, the OPEC monthly report said U.S. crude oil production in 2020 is likely to increase by 1.24 million bbl/d to average 13.54 million bbl/d.

"Despite the opening of new pipelines from the Permian, [year-over-year] overall tight crude growth is forecast at the same level of 1.30 million bbl/d for next year. The anticipated surge in Permian production will be offset by the need for capital discipline in other regions, particularly those regions with a marginal breakeven, which will impact drilling and completion activities leading to a slowdown in year-on-year growth in those areas," OPEC said.