OPEC’s April oil output slipped in April, while the oil exporting group projected increased demand in 2019, signalling a crunch in supply.
The Organization of Petroleum Exporting Countries (OPEC) said in its monthly oil report the group’s April output declined by 3,000 barrels per day (bpd) month-on-month to 30.031 million bpd. Although a small decline, Iran saw the largest drop of 164,000 bpd as it faces U.S. sanctions. Saudi Arabia also reduced output by 45,000 bpd.
Meanwhile, world oil demand for the year is projected to increase by 1.21 million bpd, to average 99.94 million bpd and demand for OPEC crude in 2019 was also revised up by 300,000 bpd to 30.6 million bpd.
OPEC also expects lower production from U.S due to fundamental constraints, mainly limited pipeline capacity to transfer Permian oil to the US Gulf Coast (USGC) as well as lower drilling and completion activity in main shale plays.
Year-on-year growth in U.S. tight crude output for 2019 is forecast at a slower pace of 1.32 million bpd to average 7.88 million bpd, which is 0.28 million bpd less than estimated for 2018.
OPEC, Russia and other non-member producers agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months. The group will meet this month to review market conditions before a June Vienna meeting where they will decide whether to extend the pact.
As non-OPEC oil supply growth in 2019 was revised down by 33,000 bpd, further cuts to OPEC production imply higher prices. Brent crude has risen by 55 per cent from $45 per barrel in 32 months since OPEC’s first agreement with non-members in late 2016 to cut production.