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OPEC sees 'considerable uncertainty' in oil market

AFP  |  Paris 

After months of price rises there is now considerable uncertainty as to the market's direction for the rest of the year, said today as a key meeting of producers looms.

Question marks over global economic growth, and resulting demand, as well as over US producers' capacity to pump oil at an ever faster pace make forecasting difficult, the Organization of the Petroleum Exporting Countries said in its regular monthly report.

Various sources show that "considerable uncertainty as to world and non-supply prevails", said, leading to a wide range of estimates for the remainder of 2018.

While economic growth is projected to be strong in the US, and Japan, there is a chance of a slowdown in and India, OPEC said.

For now, global growth is expected at 1.61 millions of barrels per day (mb/d) in the second half of the year, with total projected to breach the 100 mb/d level. But uncertainty "warrants close monitoring of the factors impacting both world oil demand and non-OPEC supply that will shape the outlook of the going forward", the report said.

Non-OPEC suppliers include the where producers have returned to the business in droves, encouraged by rising prices. This will help push non-OPEC oil supply growth to 2 mb/d in the second half of the year, OPEC said.

The has risen steadily over the past year, with Brent crude establishing itself above USD 70 for the first time in years last month -- some 30 per cent higher than at the same time in 2017.

Drawdowns "in crude oil inventories, and geo-political developments have supported this rising trend," OPEC said. Today, Brent oil stood at nearly USD 76.

The will be a critical factor when OPEC and its partners meet in next week to decide on a possible extension of a production cut deal -- which crucially included giant -- that has been key to the

OPEC kingpin in January publicly floated the idea to extend the cooperation agreement which was struck by 24 OPEC and non-OPEC producers in late 2016 to trim output to shore up prices.

OPEC in April praised the agreement as a "great success". The is on high alert ahead of the June 22 meeting, sector analysts reported, saying there were signs that and would push for higher production ceilings at the meeting.

US has personally called on to increase output to curb rising prices and help boost the "Markets are braced for the most fractious conference as OPEC members look fundamentally divided," said

"Expect more of the same whippy markets driven by rumours and innuendo ahead of June 22 OPEC meeting," predicted OPEC's own rose slightly in May, the monthly report showed.

Production fell in Nigeria, and Venezuela, but increased in Saudi Arabia, and Iran's share of OPEC production increased slightly last month, possibly a sign that the country's crude exports have not yet been affected by the US decision to ditch a landmark international nuclear accord with and re-impose damaging sanctions.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 17:40 IST