OPEC cuts 2020 oil forecast, urges effort to avert new glut

Marco Green
September 12, 2019

Oil prices tumbled more than 2% on Wednesday after a report that U.S. President Donald Trump was considering easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about energy demand. The session high was $63.26.

Bolton's ouster could pave the way for negotiations between Washington and Tehran on a new nuclear deal for the Islamic Republic that may eventually see US sanctions on Iranian oil being removed.

People familiar with the matter report that Bolton, a well-known Iran hawk was strongly opposed to that approach on Iran and voiced his displeasure to President Trump. Furthermore, crude oil traders are also showing little response to optimistic developments over U.S.

Crude oil futures fell 0.17 percent to Rs 4,000 per barrel on Thursday after speculators booked profits at existing levels amid subdued spot demand.

World oil stockpiles and supplies are plenty, according to the latest OPEC monthly report, despite the loss of more than two million barrels per day of Iranian oil exports.

At 416.1 million barrels, US crude inventories were at their lowest since October 2018, the EIA said. That lifted total exports of crude and products to almost 9 million b/d.

Elsewhere, Saudi Arabia and Russian Federation, the leaders of the alliance undertaking crude oil supply adjustments, have said they aim for "full conformity" from all members of the super-group to curb output and boost oil prices. Indeed, the cartel's monthly report highlighted the need for production cuts to prevent more oversupplies. The news has even offset the bullish tone sent earlier in the week when Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister, said oil policy would not change and said the OPEC+ output cut deal would be maintained. "Understandably, OPEC is anxious and the market even more at what lies ahead for the cartel". Estimates are based on preliminary data from direct communication for non-OPEC supply, OPEC NGLs and non-conventional oil, while estimates for OPEC crude production are based on secondary sources.

The EIA also said gasoline inventories slipped by 0.68 million barrels last week, compared with expectations for a drop of about 0.85 million.

With major global economies teetering on the brink of recession, analysts expect oil demand to decline, putting pressure on prices.

Other reports by Click Lancashire

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