Opec maintains forecasts ahead of meeting

Opec kept its demand and supply forecasts little-changed ahead of the forthcoming meeting in Vienna where it will discuss the production restraint deal with its non-Opec partners.

"The observed slowdown in the global economy in the first half of 2019 will further be challenged in the second half, mainly by mounting trade disputes, with the impact on oil demand growth remaining uncertain," the organisation said in its latest Monthly Oil Market Report (MOMR). "While growth in non-Opec supply continues, the extent of additional production in key regions in the second half of 2019 will mainly depend on volumes of start- and ramp-ups."

Russia's finance minister said earlier this week that crude prices could fall as low as $30/bl without an extension of the output cut deal beyond its expiry at the end of June. And Saudi energy minister Khalid al-Falih said there is a "growing consensus" over the need to extend the agreement.

Opec slightly lowered its 2019 global oil demand growth forecast, by 70,000 b/d to 1.14mn b/d, mainly because of "sluggish oil demand data in the OECD region during the first quarter of 2019". It now expects consumption to average 99.87mn b/d this year.

It kept its non-Opec supply growth forecast unchanged, at 2.14mn b/d for 2019. This compares with growth of 2.91mn b/d last year.

"The US is projected to remain the main driver for non-Opec supply growth in 2019, adding 1.83mn b/d year-on-year, followed by Brazil, Russia, China, Australia and the UK," the report said. It forecasts non-Opec supply to average 64.51mn b/d this year.

Citing secondary sources, of which Argus is one, the MOMR said Opec crude production fell by 236,000 b/d in May to 29.88mn b/d. According to data submitted by member countries to the Opec secretariat, Saudi Arabia reduced output by 136,000 b/d in May from April, to 9.67mn b/d. Iraq said it boosted production by 95,000 b/d to 4.6mn b/d; Angola by 70,000 b/d to 1.46mn b/d and Nigeria by 41,000 b/d to 1.75mn b/d.

Opec's report puts the call on its crude at 30.5mn b/d this year, compared with 30.6mn b/d it anticipated in May. That is around 1.1mn b/d lower than average demand for Opec crude in 2018.