According to Dow Jones, the International Energy Agency (IEA) said on Friday that the global economic cooling may mean a slowdown in oil demand growth in 2019, even if oil producers maintain adequate supplies.
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In its highly watched oil market report, the International Energy Agency (IEA) lowered its forecast for global oil demand growth for the second month in a row, from 1.3 million barrels a day last month to 1.2 million barrels.
The IEA said that after struggling to cope with supply concerns in recent months, the main focus of the oil market was oil demand, as the economy was weak, on the grounds that global trade growth had reached its lowest level in 10 years, as well as the warm winter in Japan and the weakness of the petrochemical industry in Europe.
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This is the third major oil market report this week that is more pessimistic about oil demand. Earlier, the US Energy Intelligence Agency (EIA) released pessimistic demand data on Tuesday and OPEC expressed the same pessimism on Thursday.
Although demand growth is slowing, meeting expected demand growth is unlikely to be a problem, the IEA said, noting that the United States will contribute 90% to the 1.9 million barrels per day supply growth in non-OPEC countries.
The agency said that, combined with uncertainties in demand, when it meets in Vienna later this month to discuss extending the cut-off period, OPEC members and their allies will consider “sustained supply growth from competitors”.
OPEC and its allies cut production at the end of 2018. Previously, concerns about global economic growth led to a fall in oil prices.
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Many Saudi officials have said that the country wants to extend the cut to the second half of 2019. The IEA report showed that Saudi Arabia’s implementation rate of output reduction in May was 290%, as the country reduced its daily production by 110,000 barrels. This led to OPEC’s lowest supply since 2014.
However, OPEC’s compliance was inconsistent, with Iraq increasing its oil supply by 130,000 barrels in May.
Analysts said the extension of production cuts largely depends on Russia, and senior oil industry figures expressed concern that market share was taken away by the United States. Russia’s production fell by 120,000 barrels on May, but the IEA attributed this to the suspension of production after the pollution of the Druzba pipeline.
The IEA said that, in addition to other planned disruptions and maintenance activities, the disruption of this critical pipeline led to the lowest start-up of global refineries in two years.
Although global oil investors will continue to focus on demand and global economic growth, the supply risks that dominated the market earlier this year have not dissipated.