London — OPEC, which has resisted the US' calls to fully unleash its spare crude oil production capacity, presented another bearish outlook for the oil market Thursday, lowering its forecast of 2019 demand for the fourth straight month.
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Barkindo says oil market 'well supplied'
Oil inventories grow for third straight month
Demand growth seen weakening
OPEC has raised its crude production in recent months to help offset looming US sanctions on Iran but says it needs to proceed cautiously despite rising oil prices, for fear of flooding the market next year.
The forecasts in the bloc's latest closely watched monthly oil market report explain the circumspection.
Global consumption next year will reach 100.15 million b/d, OPEC said in the report, 80,000 b/d less than it had projected in September, as the producer group sees less economic growth in Europe and Latin America.
Supplies from outside the bloc, meanwhile, will rise to 61.89 million b/d in 2019, the report found, "with potential skewed to the upside." That is 180,000 b/d more than September's forecast.
In a briefing with reporters Thursday, OPEC Secretary General Mohammed Barkindo said the oil market was "well supplied" but reiterated that the bloc stood ready to pump as much as customers require. Oil prices, despite a sell-off over the past few days, have stood near four-year highs this month, with many analysts saying a supply squeeze could be coming from the US sanctions on Iran, which go into force November 5, and Venezuela's continued collapse.
"The market has been reacting to perceptions of a supply shortage, [but] it is not really as such," Barkindo said on the sidelines of the Oil & Money conference in London. "The balance may be fragile as a result of non-fundamental factors, but I remain confident that we will overcome."
In its report, OPEC projected that demand for its crude will average 33.06 million b/d in the fourth quarter of this year, which is higher than the group's September output of 32.76 million b/d, as estimated by the secondary sources it uses to track production.
But the call on OPEC crude falls considerably to 31.53 million b/d in the first quarter of 2019 and 31.74 million b/d in the second quarter. For the full year 2019, the call will average 31.79 million b/d.
Global oil inventories also grew for the third straight month in August, OPEC said in the report.
Saudi energy minister Khalid al-Falih said at an OPEC/non-OPEC monitoring committee meeting in Algiers last month that the soft market outlook warranted prudence on output policy.
"We could have an oversupply situation," Falih said. "Given where we are today on inventory levels, we need to make sure we don't get into a sustained build of inventories in 2019."
TRUMP SAYS PUMP
Under pressure from US President Donald Trump, who has accused OPEC of colluding to keep prices high, the producer group and 10 allies, including Russia, agreed in June to raise their crude output by a collective 1 million b/d from May levels.
OPEC has accomplished a 580,000 b/d gain through September, not including the Republic of Congo, which joined the organization in June, the report indicated.
Most of that has come from Saudi Arabia, whose September output of 10.51 million b/d, according to secondary sources, is 520,000 b/d higher than it was in May. The kingdom self-reported a production level of 10.50 million b/d.
It has said it can pump as much as 12 million b/d at will, though its full production capacity has never been tested.
Sanctions-hit Iran has seen its output drop 380,000 b/d since May, according to secondary sources, who estimated Iranian production of 3.45 million b/d in September.
The country, however, insists its production has not been affected by the coming sanctions, self-reporting 3.76 million b/d for September, down just 50,000 b/d from May.
Venezuela has lost 190,000 b/d since May, according to secondary sources, who pegged the country's September output at 1.20 million b/d.
Like Iran, Venezuela has self-reported a much smaller drop, saying its September production averaged 1.43 million b/d, a 100,000 b/d drop from May.
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