Economy

IEA Reveals a Big Surprise for Oil Bulls

IEA Reveals a Big Surprise for Oil Bulls

The Organization of the Petroleum Exporting Countries (OPEC) and some non-aligned producers including Russian Federation have been withholding oil supply since the start of the year to tighten global markets and prop up crude prices.

In a monthly report, the Organization of the Petroleum Exporting Countries said 2019 demand for its crude would average 30.46 million barrels per day, 130,000 bpd less than forecast last month and below what it is now producing.

The report highlights that even though OPEC and its leader, Saudi Arabia, got some results by keeping oil prices at a certain level via production cuts, this also stimulated shale oil production in the USA and led to the US becoming the biggest crude oil producer. 'This highlights the continued shared responsibility of all participating producing countries to avoid a relapse of the imbalance and continue to support oil-market stability in 2019.

Oil gained for a second straight week as Opec assured traders it's committed to culling supplies ahead of a key meeting with allies in Azerbaijan this weekend, said a report. OPEC+ changed course after prices slid from $86 in October, making them wary of a new glut. OPEC supply dropped by 797,000 bpd in January when the new cuts first went into effect.

OPEC inventories increased by 22 million barrels in January to 2.88 billion barrels.

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OPEC's share of the cut is 800,000 bpd, and the report showed producers were over-delivering. Involuntary production declines from the coalition's members including Venezuela and Iran have further squeezed supplies.

Overall OPEC output fell by 221,000 bpd month-on-month to 30.55 million bpd.

An unexpected dip in USA crude oil inventories and production also lifted prices, traders said.

According to Bloomberg, in its monthly report, the Organization of Petroleum Exporting Countries cut forecasts for world oil demand and boosted projections for non-OPEC supply, particularly in the second half of the year. The newspaper article also states that USA energy gains will have a price for the environment and that Change.org has described the situation as a "climate disaster".

Production is expected to increase 1.35 million bpd compared to the previous year, but will grow more slowly than the previous forecast of 1.45 million bpd.