Global oil market faces surplus throughout 2019 as demand growth slows

Oil output around the world has swelled since the middle of the year. (AFP)
Updated 14 November 2018

Global oil market faces surplus throughout 2019 as demand growth slows

  • Output around the world has swelled since the middle of the year
  • The agency raised its forecast for oil output growth from countries outside OPEC

LONDON: Global oil supply will outpace demand throughout 2019, as a relentless rise in output swamps growth in consumption that is at risk from a slowing economy, the International Energy Agency said on Wednesday.
In its monthly report the Paris-based IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but cut its forecast for non-OECD demand growth, the engine of expansion in world oil consumption.
For the first half of 2019, based on its outlook for non-OPEC production and global demand, and assuming flat OPEC production, the IEA said the implied stock build is 2 million bpd.
Output around the world has swelled since the middle of the year, while an escalating trade dispute between the United States and China threatens global economic growth.
On Wednesday, three sources familiar with the matter told Reuters that OPEC and its partners are discussing a proposal to cut oil output by up to 1.4 million bpd for 2019 to avert an oversupply that would weaken prices.
Since early October, the oil price has fallen by a quarter to below $70 a barrel, its lowest in eight months, which may protect demand to an extent, the IEA said.
“While slower economic growth in some countries reduces the outlook for oil demand, a significant downward revision to our price assumption is supportive,” it added.
The agency raised its forecast for oil output growth from countries outside the Organization of the Petroleum Exporting Countries to 2.4 million bpd this year and 1.9 million bpd next year, versus its previous estimate of 2.2 million bpd and 1.8 million bpd, respectively.
The United States will lead output growth. The IEA estimates total US oil supply will rise by 2.1 million bpd this year and another 1.3 million bpd in 2019, from a current record of more than 11 million bpd.
OPEC crude output rose by 200,000 bpd in October to 32.99 million bpd, up 240,000 bpd on a year ago, as losses of 400,000 bpd from Iran and 600,000 bpd from Venezuela were easily offset by increases from others, such as Saudi Arabia or the United Arab Emirates.
“Next year, there is expected to be even less need for OPEC oil due to relentless growth in non-OPEC supply,” the IEA said, adding that it had cut its forecast for demand for OPEC crude by 300,000 bpd to 31.3 million bpd in 2019.
Inventories of oil in OECD countries rose by 12.1 million barrels in September to 2.875 billion barrels, the IEA said, adding that for the third quarter as a whole, stocks rose 58.1 million barrels, or at a rate of 630,000 bpd, the biggest increase since 2015.


IMF experts visit Lebanon amid worsening economic crisis

Updated 20 February 2020

IMF experts visit Lebanon amid worsening economic crisis

  • IMF team will provide broad technical advice
  • Lebanon has not requested IMF financial assistance

BEIRUT: A team of IMF experts met Prime Minister Hassan Diab on Thursday at the start of a visit to provide Lebanon with advice on tackling a deepening financial and economic crisis, an official Lebanese source said.

The IMF has said the team will visit until Feb. 23 and provide broad technical advice. Lebanon has not requested financial assistance from the Fund.

The long-brewing economic crisis spiraled last year as capital flows into the country slowed and protests erupted against the ruling elite over decades of corruption and bad governance.

Diab’s government, which took office last month, must decide what to do about upcoming debt payments, notably a $1.2 billion dollar-denominated sovereign bond due on March 9.

Lebanese President Michel Aoun meanwhile said on Thursday measures would be taken to hold to account all those who contributed to Lebanon’s financial crisis through illegal actions be they transfers abroad, manipulation of Eurobonds or other acts.

“There is information that we are still in need of with regards to the banking situation. There are measures that we will take to hold to account all who participated in bringing the crisis to where it is,” Aoun said, according to his Twitter account.

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One of Lebanon’s most influential politicians, Parliament Speaker Nabih Berri, said on Wednesday that debt restructuring was the best solution for looming maturities.

Lebanon will on Friday review proposals from firms bidding to give it financial and legal advice on its options, a source familiar with the matter said on Thursday. The government aims to take a quick decision on who to appoint, the source said.

So far, firms bidding to be Lebanon’s legal adviser are Dechert, Cleary Gottlieb, and White and Case, the source said.

Lebanon has issued requests for proposals to seven firms to provide it with financial advice.

The government on Wednesday formed a committee tasked with preparing an economic recovery plan that includes ministers, government officials, a central bank representative and economists, according to a copy of a decree seen by Reuters.