Nigeria may relapse into oil market imbalance – OPEC

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OPEC

The Organisation of Petroleum Exporting Countries said on Wednesday that Nigeria and other oil-producing countries must support market stability to avoid unwanted volatility and a potential relapse into market imbalance.

OPEC, in a feature article published in its Monthly Oil Market Report for September, reviewed global economic developments and highlighted major challenges to growth including the ongoing trade dispute between the United States and China.

It said an important support factor so far this year had been the relatively stable oil market, which continued to benefit from the ongoing efforts under the OPEC-Non-OPEC Declaration of Cooperation.

OPEC said it pumped 29.74 million barrels per day in August, up 136,000 bpd on July, according to an average of the six secondary sources used by the organization to track member output.

Crude oil output increased mostly in Saudi Arabia, Nigeria, Iraq, and the UAE, while it declined mainly in Venezuela, Iran, Libya, Kuwait and Algeria.

Nigeria’s oil production rose to 1.91 million barrels per day in August from 1.83 million bpd, based on direct communication.

OPEC, Russia and nine other allies in July agreed to extend their collective 1.2 million bpd supply cut agreement through the first quarter of 2020.

The group, on Wednesday, lowered its estimate for the demand for its oil this year but left its 2020 outlook little changed ahead of a key OPEC/non-OPEC ministerial meeting set to review its current output curbs and country-level quotas.

Global demand for OPEC’s crude will average 30.61 million bpd, 80,000 bpd below its previous forecast, the producer group’s analysis arm said in its latest monthly oil market report.

OPEC said it saw world oil demand in 2019 growing by 1.02 million bpd, which is also 80,000 bpd lower than last month’s forecast.

The group pointed to an economic slowdown in the US and the eurozone, lower-than-expected growth in India, rising sovereign debt issues in Argentina, and the continuation of the US-China trade dispute.

Looking ahead, OPEC left its estimate for the average demand for its crude in 2020 little changed at 29.40 million bpd despite a downward revision to expected US shale growth. However, OPEC cut its estimate of demand for its oil sharply by 390,000 bpd in the second quarter of next year to 29 million bpd.

According to OPEC, world oil demand is projected to increase by 1.08 million bpd in 2020, a downward adjustment of 60,000 bpd from its previous assessment.

A nine-country Joint Ministerial Monitoring Committee, co-chaired by Saudi Arabia and Russia, is scheduled to meet on Thursday (today) tasked with monitoring market conditions, assessing compliance with production quotas, and making policy recommendations to the wider coalition.

The full OPEC/non-OPEC meeting is December 5-6 in Vienna.

OPEC revised its non-OPEC oil supply growth forecast for 2020 by 136,000 BPD 2.25 million BPD to reflect a large downward revision to the US oil supply, which is now expected to grow by 1.54 million BPD.

“The forecast for next year remains subject to many uncertainties, mainly relevant to the capital-spending discipline and a slowdown in drilling and completion activity in the US,” OPEC said.

OPEC also trimmed its non-OPEC supply estimate for 2019 by 10,000 bpd to 1.99 million BPD with upward revisions to production from Russia, Kazakhstan, Australia and Canada offsetting the downward revision to its forecast for the US.