OPEC cuts 2020 oil demand forecast, urges effort to avert new glut

Energy Minister

Gains in USA supply are undermining efforts by the Organization of Petroleum Exporting Countries and its allies, whose production cuts are in their third year in a bid to drain stockpiles.

Saudi Arabia and Russian Federation on Thursday called on OPEC members and its allies to better comply with oil production cuts.

Iraq's and Nigeria's oil ministers pledged on Thursday to reduce oil output to comply with their OPEC output targets. He recalled that last November OPEC and other producers, headed by Russian Federation, agreed to cut production by 1.2 million bpd.

Global oil demand growth is expected to remain subdued, with the economy weakening and buffeted by US-China trade tensions, the International Energy Agency (IEA) said Thursday.

"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.

"The challenge of market management remains a daunting one well into 2020", the agency said in its monthly report.

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Even so, stocks in July exceeded the five-year average - a yardstick OPEC watches closely - by 36 million barrels.

OPEC and its partners have been limiting supply since 2017, helping to clear a glut that built up in 2014-2016 when producers pumped at will, and revive prices.

The Organization of the Petroleum Exporting Countries (OPEC) saw the price of its reference basket of crude oil components drop by 7.9% in August to $59.62 a barrel, more than the 7.3% drop in Brent crude or the 4.7% drop in West Texas Intermediate (WTI) crude.

Saudi Arabia's October production would be 9.890 million barrels per day, Prince Abdulaziz bin Salman said after a meeting of ministers from the Organisation of the Petroleum Exporting Countries and its allies led by Russian Federation. Projected demand for OPEC crude in 2020 was unchanged at 29.4 million barrels a day, about 1.2 million below the forecast demand for this year. It was the first increase this year.

OPEC member Iran continued to suffer under USA sanctions, with exports almost halving month-on-month in August to just 200,000 bpd.

It is choosing as many as nine joint global coordinators including some Middle Eastern banks, the people said, asking not to be identified because the information is private.

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