OPEC cuts forecast for global crude demand in 2019

OPEC cuts forecast for global crude demand in 2019

Oil rallied on Wednesday on USA government data showing a surprise fall in crude inventory and a lower-than-expected estimate of US crude production growth.

The production cut agreement by Saudi Arabia-led OPEC and Russia-led OPEC is also contributing to the removal of additional supplies in the market to push prices higher.

With OPEC voluntarily withholding supply and US sanctions preventing Iranian and Venezuelan oil from entering markets, global crude flow data in Refinitiv showed a slight supply deficit likely appeared in the first quarter.

An unexpected dip in US crude oil inventories and production also supported prices, traders said.

U.S. West Texas Intermediate crude oil futures are trading higher on Thursday, helped by reports of tightening global supplies.

Opec forecasts non-member producers to boost output in 2019 by 2.24 million bpd, 60,000 bpd more than expected previously. Meanwhile, distillates stockpiles unexpectedly increased by 0.38 million barrels. The agency also slightly reduced it's 2020 predictions, bringing it's forecast down from 13.2 million barrels a day down to 13 million.

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"This highlights the continued shared responsibility of all participating producing countries to avoid a relapse of the imbalance and continue to support oil market stability in 2019", OPEC said. According to the U.S. Energy Information Administration, U.S. commercial crude inventories fell last week as refineries hiked output.

"While oil demand is expected to grow at a moderate pace in 2019, it is still well below the strong growth expected in the non-OPEC supply forecast for this year", OPEC said in the report.

WTI has been recovering from the recent lows below the 55 handle scored earlier this month and has been knocking on the door of a critical technical level around recent highs en route to test territory in the mid 58 handle and highest levels since mid-November.

Raw stocks at the Kacheng delivery office in Oklahoma fell by 1.1 million barrels, the institute said.

Gasoline inventories were down 4.62 million barrels last week, almost twice the expected drop.

The U.S.' crude oil production was estimated to average 12.4 million bpd this year and 13.2 million bpd next year, according to the EIA's report in February.

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