OPEC Lowers Growth Forecast of World Oil Demand

West Texas oil wells

West Texas oil wells

"My honorable colleague Minister Novak has wakened up to a new reality which is that we are not being too inclusive and we should have been", said the Saudi minister, who was seated next to his Russian counterpart Alexander Novak. Yet hopes for additional cuts at this point are harder because of the news that the U.S.is the number 1 exporter in the world. Later on Wednesday, the EIA releases its weekly report.

Brent crude futures rose 41 cents, or 0.7 per cent, to $61.22 by 0051 GMT, while US West Texas Intermediate (WTI) futures gained 40 cents, or 0.7 per cent, at $56.16.

Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels in the week to September 6.

Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 3% above the five year average for this time of year.

At 416.1 million barrels, US crude stockpile had been at their weakest since October last year, and about 2% below the five-year average for this time of year, the EIA stated. Oil demand rocked as well.

While world oil demand is forecast to increase around 1 million barrels per day (mbd) in both 2019 and 2020, the cartel said: "Nevertheless, this is expected to be outpaced by the strong growth in non-Opec supply". Analysts were looking for a 1.4 million barrel draw in gasoline and a 220,000 barrel rise in distillate supplies. The median probability of a USA recession in the next two years held at a high of 45%, and the chance of one in the next 12 months held at 30%.

Yet the International Energy Agency (IEA) is warning of a global oil glut. Oil prices rose on Wednesday after an industry report showed that crude stockpiles in the USA fell last week by more than twice the amount that analysts had forecast.

The tussle for the No. 1 slot could remain tight in the months ahead.

Oil demand growth will be "significantly higher" helped by a comparatively low base in the second half of 2018, lower oil prices versus a year ago and additions to petrochemicals capacity, the IEA said.

This appeared to be borne out by the figures for July showing a gain of 1.3 mbd.

The IEA reported, "In recent weeks, tensions in the Middle East Gulf have eased and oil industry operations appear to be normal". The JMMC does not take decisions but makes recommendations for action, which will be considered by the full OPEC+ ministerial meeting in December.

Iraq and Nigeria, two of OPEC's members which were over-producing well above their OPEC targets, joined Prince Abdulaziz at the same news conference table after a joint committee meeting, known as the JMMC, to pledge swift production cuts. Saudi Arabia is doing more than our humble commitment in terms of its voluntary contribution (to oil cut deal).

OPEC's estimate for global economic growth has been reduced to 3.0 per cent for 2019 and 3.1 per cent for 2020, down 0.1 in each year compared with the August estimate.

Oil futures hit a six-week high on Tuesday, rising for a fifth day on optimism that OPEC and other countries may agree to extend production cuts in a bid to support prices.

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