The projected drop in demand for OPEC crude is a reflection of that.
Kolkata: The Organization of the Petroleum Exporting Countries (OPEC) may have signed a pact to keep crude supply under control, but there may still be a surplus in the market as the world demand for crude is projected to drop next year. At least that's what OPEC indicated on Thursday. As a policy, OPEC supports and encourages supply control mechanism. The projected drop in demand for OPEC crude is a reflection of that.
OPEC's latest monthly report, the maiden crude forecast of 2020, suggested that the world would need 29.27 million barrels per day (bpd) of crude from its 14 members next year, down 1.34 million bpd from this year. However, OPEC in the same report predicted that world oil demand would rise at the same pace as this year and that the world economy would expand at this year's pace, despite slower growth in the US and China.
It is pertinent to mention here that with effect from January 1, 2019, OPEC, Russia and other producers have been implementing a deal to cut output by 1.2 million bpd. The alliance, called OPEC+, last week renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices.
"Brent oil prices under pressure despite large inventory drop... OPEC supply cut and geopolitical issues in the Middle East may provide some support at lower levels. Immediate resistance is seen around $64.20 per barrel while the key support level is seen around $61.40 per barrel," said Abhishek Bansal, chairman, ABans Group of Companies.