OPEC revises down forecasts for world oil demand growth

Feb 14, 2019, 00:47
OPEC revises down forecasts for world oil demand growth

The oil price has risen 20% so far this year, yet most of that increase materialised in early January, before the imposition of U.S. sanctions on Venezuela's energy sector.

"In quantity terms, in 2019, the United States alone will grow its crude oil production by more than Venezuela's current output".

At 07:56 GMT, April WTI crude oil is trading $53.82, up $0.35 or +0.65% and April Brent crude oil is at $62.94, up $0.52 or +0.83%.

The oil price may also have risen due to the news that Saudi Aramco, Saudi Arabia's largest oil company, will invest billions more in exploration of gas and oil outside its borders.

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The global oil market will struggle this year to absorb fast-growing crude supply from outside OPEC, even with the group's production cuts and USA sanctions on Venezuela and Iran, the International Energy Agency said in a report on Wednesday.

The latest short-term energy outlook "puts the nation on track to set a new production record for a third consecutive year", EIA Administrator Linda Capuano said in a statement.

In the United States, energy firms last week increased the number of oil rigs operating for the second time in three weeks, a weekly report by Baker Hughes said on Friday.

The report comes at a time when tensions in Venezuela are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere's worst humanitarian crisis in recent memory.

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The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly. OPEC members (excluding Iran, Venezuela and Libya) are responsible for two thirds of production cut.

With the actual loss of Venezuelan and some Middle Eastern crude, and the potential loss of Iranian barrels, the dilemma for Asian refiners becomes more acute. In quality terms, it is more complicated. The supply cuts, which also include Russian Federation and nine other non-OPEC producers, took effect on January 1.

Venezuela accounted for 16 percent of OPEC output and 8 percent of world production in 1970 but those percentages had fallen to just 5 percent and 2 percent respectively by 2017 (https://tmsnrt.rs/2E4Pfb9).

The cartel and the world's biggest exporter, Saudi Arabia, slashed its output more than expected under the OPEC deal, to 10.2 million barrels a day in January and is aiming to pump around 100,000 barrels less in February.

Venezuelan Dictator Nicolás Maduro Appeals to Pope Francis for Support
Over the weekend, he called on the army to allow in humanitarian aid from the United States via neighboring Colombia and Brazil. Those who continue to violate the human rights of ordinary Venezuelans under an illegitimate regime will be called to account.

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