OPEC: lower market share in the coming years

Daniel Fowler
November 7, 2019

OPEC, the Organisation of the Petroleum Exporting Countries, said that the U.S. will overtake it in terms of crude oil output within the next five years.

The American Petroleum Institute reported that crude stockpiles increased by 4.26 million barrels last week, according to people familiar, before official government data later on Wednesday.

USA crude oil production as estimated by the Energy Information Administration showed that production for the week ending October 25 stayed at 12.6 million bpd for the fourth week in a row-the highest production level that the United States has seen.

Futures lost as much as 0.7% in NY after rising 5.6% over the past three sessions. China is seeking a rollback of USA tariffs before signing a deal, while it's unclear if President Donald Trump will be willing to cut any duties.

OPEC and its partners, including Russian Federation, previously agreed to cut oil production by 1.2 million barrels per day until March 2020.

Brent for January settlement fell 37 cents, or 0.6%, to $62.59 a barrel on the London-based ICE Futures Europe Exchange.

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading lower early Wednesday after failing to follow-through to the upside following yesterday's strong surge. Analysts predicted a draw in gasoline inventories of 1.809 million barrels for the week.

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"All eyes are on the U.S.to see whether the Trump administration would remove existing Chinese tariffs ahead of signing the Phase 1 trade deal", PVM Oil Associates analyst Tamas Varga wrote in a report, adding that "the short-term direction will be partly influenced by the upcoming weekly USA inventory data".

Global demand will reach 105.6 million barrels per day (bpd) by 2025, which is 6.9 million bpd higher than 2018, according to an annual market outlook.

OPEC cited a recent lowering of economic growth forecasts plus efficiency gains and use of other fuels for the lower demand outlook. The report is expected to show an 800,000-barrel build.

Adding to Middle East tensions, Iran started to inject uranium gas into centrifuges at an underground nuclear facility, further distancing itself from a 2015 nuclear deal between Tehran and world powers that curbed its atomic work.

The United States pulled out of the nuclear pact a year ago and has imposed tough new sanctions on Iran.

"This is just a huge wind at the back of the market now", Kilduff said.

OPEC now still holds around 35 percent of the oil market.

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