0614 GMT October 18, 2019
In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020, Reuters wrote.
The bearish outlook due to slowing economies amid the US-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices. Already, a Saudi official has hinted at further steps to support the market.
"While the outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil demand growth, it remains critical to closely monitor the supply/demand balance and assist market stability in the months ahead," OPEC said in the report.
It is rare for OPEC to give a bearish forward view on the market outlook and oil pared an earlier gain after it was released to trade below $59 a barrel.
Despite the OPEC-led cut, oil has tumbled from April's 2019 peak above $75 pressured by trade concerns and an economic slowdown.
OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a buildup of inventories that could hit prices.
OPEC left its forecast for 2020 oil demand growth at 1.14 million bpd, up slightly from this year. But OPEC added that its forecast for 2020 economic growth faced downside risk.
"The risk to global economic growth remains skewed to the downside," the report said. "Especially trade-related developments will need to be thoroughly reviewed in the coming weeks with some likelihood of a further downward revision in September."
OPEC trimmed its global economic growth forecast to 3.1% from 3.2% and, for now, kept its 2020 forecast at 3.2%.
The report also said oil inventories in developed economies rose in June, suggesting a trend that could raise OPEC concern over a possible oil glut.
Stocks in June exceeded the five-year average – a yardstick OPEC watches closely – by 67 million barrels.
This is despite the supply cuts of OPEC+ and additional involuntary losses in Iran and Venezuela, two OPEC members which are under US sanctions.