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OPEC Comments on the Crude Oil Production and Prices

 19 Nov 2019

The United States Crude inventories witnessed a major drop on Thursday. At the same time, the prices of oil saw growth. The oil rates were restricted due to the mixed signs for its demand from the world's leading importer of crude oil i.e. China. The main reason for the lower demand for crude oil is the lower industrial output in the month of October.

If the current reports are to be believed, Brent futures witnessed an increase of 0.8 percent. It went up to 47 cents from 62.68 cents on Thursday. On the other hand, the United States West Texas Crude oil rose to 57.60 percent.

In the coming year, the economy is expected to witness a downward alteration in the crude oil demand and prices, said Mohammed Barkindo (the Secretary-General of OPEC). The Secretary of the Organization of the Petroleum Exporting Countries further added that this downward alteration will mainly come from the United States. This is because the United States industrial output is expected to grow by a maximum of 400,000 barrels every day (which is pretty lower than the estimated growth).

The Forecast of Oil Production and Price by the Organization of the Petroleum Exporting Countries

As far as Mohammed Barkindo’s comment on crude oil is concerned, it seems as if the secretary of OPEC promotes the crude oil prices. But if Howie Lee's (the Singapore Economist) comment is taken into consideration, there is no way for the Organization of the Petroleum Exporting Countries to estimate the production and supply of this commodity for 2020.

According to Howie Lee, oil supply has not seen major changes. That being said, the commodity is sold at the same rate from the beginning of November. Mohammed Barkindo's remarks and predictions went completely against the estimations made by the United States Energy Information Administration (EIA). According to the EIA, the production and crude oil prices were expected to set new records in 2019 and 2020. So far, the statements of EIA have not proven true.

Crude Oil Production Cuts and Prices

While the stock analysts estimated growth in crude oil by as much as 1.6 million barrels this year, the American Petroleum Institute confirmed a major fall in crude oil inventories on November 8. The crude oil witnessed a drop by 541,000 barrels. According to the further reports given by the American Petroleum Institute, Distillates inventories and Gasoline stockpiles saw an increase this month.

The Organization of the Petroleum Exporting Countries and its partners such as Russia are planning to conduct a meeting on the 5th or 6th December to plan the output policy as well as oil production. The main purpose of the meeting is to support crude oil production, supply, and prices. According to Barkindo, it couldn't be said if more output cuts would be required. If OCBC's statement is taken into consideration, no output cuts or reduction in the crude oil production will be seen in the coming days.

 

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