OPEC on Wednesday forecast world demand for its crude will decline next year as growth in consumption slows and rivals pump more, pointing to a market surplus returning despite an OPEC-led pact to restrain supplies.
Giving its first 2019 forecasts in a monthly report, the Organization of the Petroleum Exporting Countries said the world will need 32.18 million barrels per day (bpd) of crude from its 15 members next year, down 760,000 bpd from this year.
OPEC said its oil output in June rose above the 2019 demand forecast. Saudi Arabia pumped more as it heeded calls from the United States and other consumers to make up for shortfalls elsewhere and cool rising prices.
Oil has topped $80 a barrel this year for the first time since 2014, boosted by the OPEC-led output cuts and involuntary losses in Venezuela and Libya, plus concern of a drop in Iran’s exports due to the restart of U.S. sanctions.
World oil demand is expected to rise by 1.45 million bpd, less than this year, as economic growth slows. The prospect of lower demand for OPEC crude would enable the group to deal with upside surprises, the report said.
“If the world economy performs better than expected, leading to higher growth in crude oil demand, OPEC will continue to have sufficient supply to support oil market stability,” it said.
OPEC and a group of non-OPEC countries agreed on June 22-23 to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction by Venezuela and others pushed adherence above 160 percent.
In June, OPEC oil output rose by 173,000 bpd to 32.33 million bpd, the report said, citing figures OPEC collects from secondary sources. This means compliance has slipped to 130 percent, according to a Reuters calculation.
The June output figure is 150,000 bpd more than OPEC expects the demand for its oil to average next year, suggesting a small surplus in the market should OPEC keep pumping the same amount and other things remain equal.