OPEC cuts 2019 oil demand forecast on global slowdown

OPEC cuts 2019 oil demand forecast on global slowdown

OPEC cuts 2019 oil demand forecast on global slowdown

Supply issues in OPEC-member Venezuela are also bolstering oil prices as the South American country suffers a political and economic crisis, with Washington introducing petroleum export sanctions against state-owned energy firm PDVSA.

Most of that reduction has been thanks to Saudi Arabia.

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 logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen at its headquarters in Vienna, Austria, December 5, 2018.

Soaring output is putting the USA on course to become a net exporter of crude oil and petroleum products next year.

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IEA figures show Venezuala's output dropping by roughly 30,000 barrels per day to 1.26 mbd.

U.S. crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the Energy Information Administration. A day later, the EIA confirmed the inventory build, but a smaller one at 1.3 million barrels.

However, analysts are warning that record U.S. supply and anticipated economic slowdown later this year might start capping the world's oil markets.

Venezuela has tried to find alternative customers, especially in Asia, but under US pressure many buyers there are also shying away from dealing with PDVSA.

Most new supply is coming from the United States, where crude production rose by more than 2 million bpd previous year to a record 11.9 million bpd, making the country the world's biggest oil producer ahead of Russian Federation and Saudi Arabia.

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In the meantime, the political rift between Venezuela and the United States continues with the US sanctions against the South American nation giving prices a slight boost.

Heavy crudes are much harder to refine and tend to contain significant quantities of sulfur and other impurities that are costly to remove, which is why they sell at a hefty discount to medium and light oils.

Middle distillates are used mostly in freight transportation as well as manufacturing, mining and farming, and are particularly valuable late in the business cycle when economic activity is near to the peak.

"Nevertheless, this would not lift the global economy beyond the growth forecast".

Despite the political rifts between Venezuela and the United States, US refiners have in the past been some of the biggest buyers of Venezuelan crude.

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John Kemp is a Reuters market analyst.

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