OPEC on Wednesday cut its forecast for growth in world oil demand in 2020 due to an economic slowdown, an outlook the producer group said highlighted the need for ongoing efforts to prevent a new glut of crude.
In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth next year by 60,000 barrels per day to 1.08 million barrels per day and indicated the market would be in surplus.
The weaker outlook amid a US-China trade dispute and Brexit could press the case for the Organization of the Petroleum Exporting Countries and allies including Russia to maintain or adjust their policy of cutting output.
Iraq said ministers would on Thursday discuss whether there was a need for deeper cuts.
OPEC, in the report, lowered its forecast for world economic growth in 2020 to 3.1 percent from 3.2 percent and said next year’s increase in oil demand would be outpaced by “strong growth” in supply from rival producers such as the United States.
“This highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance,” the report said.
OPEC’s policy of supporting prices through supply cuts has given a sustained boost to US shale and other rival supply, and the report suggests the world will need less OPEC crude next year.
The demand for OPEC crude will average 29.40 million barrels per day next year, OPEC said, down 1.2 million barrels per day from this year.
In July, OPEC and its allies renewed a supply-cutting pact until March 2020, citing the need to avoid a build-up of inventories that could hit prices.
Even so, OPEC said its oil output in August rose by 136,000 barrels per day to 29.74 million barrels per day as Saudi Arabia, Iraq and Nigeria boosted supply.
Reuters reports that producers are still over-complying with the supply-cutting deal, but this puts OPEC output further above the 2020 demand forecast.
The report suggests there will be a 2020 supply surplus of 340,000 bpd if OPEC keeps pumping at August’s rate and other things remain equal, more than the surplus forecast in last month’s report.
