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SunSirs: Trump's Consideration of Easing Sanctions on Iraq has Triggered Supply Concerns, combined with a Slowdown in Demand, A Sharp Drop in Crude Oil

2019-09-12 14:56:25     SunSirs (Selena)

On September 11, the price of WTI crude oil futures fell to $55.75 per barrel, down $1.65, or 2.9%, more than 3% in the market. Brent crude oil futures also fell by a large margin, to $60.81 per barrel, down $1.57. The decline was 2.5%, the lowest closing price since September 4. It is rumored that Trump may ease sanctions on Iran, and oil prices have fallen as the Organization of Petroleum Exporting Countries (OPEC) lowered its expected impact on global oil demand growth in 2020.

OPEC downgraded its oil demand forecast for 2020

OPEC downgraded its forecast for global oil demand growth in 2020, saying this outlook highlights the need to continue efforts to prevent new oil oversupply. In its latest monthly report, OPEC lowered its forecast for global demand growth of 60,000 barrels a day, to 1.08 million barrels a day in 2020, and said that there might be oversupply in the market next year. OPEC also points out that global oil production will increase further next year, especially American shale oil, which has now risen to a record 12.4 million barrels a week, while EIA report predicts that the average daily production of American crude oil will be 13.23 million barrels by 2020.

The U.S. Energy Information Agency (EIA) lowered its forecast for future oil demand growth

The U.S. Energy Information Agency (EIA) also lowered its forecast for oil demand this week because of the slowdown in the economy. The U.S. Energy Information Agency (EIA) released its energy outlook report on Tuesday, lowering its global crude oil demand growth forecast of 110,000 barrels a day in 2019 to 89,000 barrels a day as yearly growth, and lowering its global crude oil demand growth forecast of 30,000 barrels a day in 2020 to 1.4 million barrels a day as yearly growth.

According to the report, EIA expects U.S. crude oil output growth is 1.25 million barrels per day, to 12.24 million barrels per day in 2019, it was expected to increase 1.28 million barrels per day. U.S. crude oil output is expected to grow 990,000 barrels per day, to 13.23 million barrels per day in 2020, it was expected to increase 1.02 million barrels per day. Nevertheless, EIA believes that U.S. crude oil production will continue to reach record highs in the next two years.

Meanwhile, Goldman Sachs recently downgraded its forecast for oil demand growth in 2019, citing declining demand in India, Japan, the Middle East and Latin America. Goldman Sachs cut its demand growth forecast from 1.1 million barrels a day to 1 million barrels a day.

Due to the slowdown of economic growth in major economies and the continuing downward revision of global oil demand growth expectations for this year and next, many institutions have reduced their global oil growth expectations for 2019 from about 1.3 million barrels per day to less than 1 million barrels per day. BP Chief Financial Officer predicts that global oil demand will grow by less than 1 million barrels a day in 2019 as consumption growth slows.

Oil supply prospects remain variable oil prices will continue to be under pressure

In the view of SunSirs, the recent changes in supply and demand in the crude oil market need further observation. The market is mainly guided by information. However, in the medium and long term, there may be some variables in the supply side of the market, which is mainly affected by the key factor of whether Iranian crude oil can return to the market. In addition, the supply side also has a negative expectation from the growth of U.S. crude oil production. Demand is still not optimistic. In the context of the Sino-US trade war, oil demand will be further compressed. In addition, most institutions have lowered their expectations of crude oil demand growth in 2020, which further aggravates market worries. It is expected that crude oil will remain mainly volatile in the short term and oil prices will be under pressure in the medium and long term.

 

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