Published: Sat, December 15, 2018
Markets | By Otis Pena

OPEC offsets Iran oil loss, sees lower 2019 demand

OPEC offsets Iran oil loss, sees lower 2019 demand

The American Petroleum Institute (API) on Tuesday reported a huge draw of 10.18 million barrels in the USA crude oil inventories for the week ending December 7. Analysts were looking for a draw of only 2.990 million barrels.

The Organization of the Petroleum Exporting Countries (OPEC) said demand for its crude in 2019 would fall to 31.44 million barrels per day (bpd), 100,000 bpd less than predicted last month and 1.53 million bpd less than it now produces.

Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil's price at the end of November to its lowest in more than a year.

A force majeure on exports from Libya's El Sharara oilfield will result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield, according to the National Oil Company.

After the news that supply would be cut, the price of oil rallied above $60 dollars a barrel, where it has remained, with Brent Crude trading at around $61 on Wednesday, while WTI Crude sits a touch over $52. It added that the nation's annualized average output would be 10.88 million bpd over the year.

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The decision to cut back on supply next year comes amid an oil market plagued by oversupply which has seen the price of crude lose more than 30% of its value since October.

Oil prices fell on Friday after China reported slower economic growth, pointing to lower fuel demand in the world's biggest oil importer, although market sentiment was supported by supply cuts agreed last week by major crude producers.

USA crude inventories at Cushing, Oklahoma, the delivery point for United States crude futures, fell by almost 822,000 barrels in the week through Dec 11, traders said, citing data from market intelligence firm Genscape. ANZ expects Brent to reach $75 a barrel in the first quarter of 2019. That was the first weekly decline since October, analysts at the Sevens Report wrote in a newsletter Thursday, but they noted that given a change in the way the EIA reports production, in increments of 100,000 as opposed to exact estimates, "the decline could have been a rounding error".

The United States, where crude production C-OUT-T-EIA has hit a record 11.7 million bpd, is set to end 2018 as the world's top oil producer, ahead of Russian Federation and Saudi Arabia.

January natural gas NGF19, +0.46% climbed by 1.5% to $4.198 per million British thermal units, looking to recoup some of its losses from Wednesday, when it dropped 6.2% to settle at $4.136-the lowest since November 15, according to FactSet data.

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