Despite fears of disruptions to global oil supplies and curbs on production, major

oil producing group OPEC sees global oil supplies as fine – it's demand that
should be worrying people.

The 15-member OPEC said Wednesday in its latest monthly report that
preliminary data suggested that the global oil supply increased 490,000 barrels a
day to average 98.9 mb/d in August, compared with the previous month.

In 2018, OPEC believes the non-OPEC oil supply in 2018 will grow by 2.02
million barrels a day (mb/d) despite making a downward revision of 64,000 b/d
from its last report. In 2019, non-OPEC oil supply is expected to grow by 2.15
mb/d, a minor upward revision of 17,000 b/d.

Meanwhile, OPEC's supply is also rising.

According to secondary sources (that is, not the producers themselves) total
crude oil production by OPEC members averaged 32.56 mb/d in August, an
increase of 278,000 b/d over the previous month.

Crude oil output increased mostly in Libya, Iraq and Nigeria, while production
declined in Iran, Venezuela and Algeria.

Iran is due to be hit with sanctions on its oil industry from November onwards
while Venezuela is experiencing economic and political upheavals, affecting
production.

Oil production by OPEC's defacto leader Saudi Arabia has ticked up since May,
when it and Russia signalled that they could increase output to fill any supply
shortages due to incoming U.S. sanctions on Iran's oil industry.

The increase comes despite an ongoing deal between OPEC and non-OPEC
producers, notably Russia, to curb oil production (and limit it to 32 million
barrels a day) in order to support prices. The deal, in place since late 2016, has
effectively lifted prices from a slump in 2015 to current levels of around $79 a
barrel for Brent crude and $69 for U.S. West Texas Intermediate.
The latest data from OPEC, collected both by direct communication with
producers and from secondary sources, shows a contrasting picture of
production in Iran as it faces impending oil sector sanctions.

According to secondary sources, Iran's oil supply production fell by 150,000

barrels a day from July to August to around 3.5 mb/d.

But Iran has reported stable and unchanged production figures for the last three
months, however, of 3.8 mb/d.

The demand picture

While global oil supplies look relatively robust according to OPEC's latest
analysis, the demand picture is one of growth, but dented growth.

OPEC revised its world oil demand growth forecasts lower for both this year and
next. In 2018, world oil demand is expected to grow by 1.62 million barrels a day,
a minor downward revision from last month's projection.

"World oil demand growth in 2018 was revised downward by around 20,000
b/d, primarily as a result of the slower-than-expected performance by non-OECD
Latin America and the Middle East during the second quarter of 2018," OPEC said
in its latest report published Wednesday.

"Hence, world oil demand growth is now pegged at 1.62 mb/d for 2018, with
total global consumption at 98.82 mb/d," it said.

"In 2019, world oil demand growth was revised slightly lower by 20,000 from
the previous month's report, primarily as a result of economic revisions to Latin
America and the Middle East," it said.

"World oil demand growth (in 2019) is now anticipated at 1.41 mb/d and total
global consumption at around 100.23 mb/d."

The China factor

What has started to trouble oil market watchers relates to the demand picture,
with fears that punitive U.S. tariffs on Chinese imports could weaken demand the
country's demand for oil

Looking at the global oil trade, OPEC noted that while China's crude oil imports
dropped in July by 70,000 barrels a day from the previous month to average 8.62
mb/d, based on an annual comparison, China's crude imports were still higher by
420,000 b/d in August, or 5 percent higher from a year ago.

Demand for oil from the 15-member producing group OPEC is expected to fall
the rest of 2018 and into 2019, OPEC said. In 2018, demand for OPEC crude is
expected at 32.9 million barrels a day (mb/d), which is 500,000 barrels a day
lower than in the previous year, the organization said.

OPEC forecasts that demand for its crude at 32.1 mb/d in 2019, around 900,000
b/d lower than a year earlier. Yet, total world oil demand in 2019 is now
projected to surpass 100 mb/d for the first time and reach 100.23 mb/d.
https://www.cnbc.com/2018/09/12/opec-sees-global-oil-supply-as-robust-global-demand-growth-revised-a-
touch-lower.html