LONDON—OPEC lowered its 2019 forecast for growth in oil demand for the second time in three months and cut its projections for global economic growth, pointing to uncertainties stemming from the trade war between the U.S. and China.
In its closely scrutinized monthly oil market report released Friday, the Organization of the Petroleum Exporting Countries said it expected a deceleration in the rise of global oil demand this year, trimming its estimate to 1.1 million barrels a day.
That figure equates to a cut in forecast demand of only 40,000 barrels a day, but it comes after similar reductions from other major oil bodies, surprise increases in U.S. oil inventories, and broader market convulsions sparked by trade tensions and recessionary signals such as yield-curve inversions.
OPEC also reduced its supply-growth forecasts for 2019 and 2020 for non-OPEC nations. Heavy production out of the U.S., now an energy exporter, had raised concerns of a supply glut, and investors may take the lower supply and demand growth forecasts as a sign of weakening consumption as stocks fill up.
“Large uncertainties remain” in the global economy, the report said. “While the growth forecast currently assumes no further risks until they actually materialize, and, in particular, that trade-related issues do not escalate further, the downside risk to world economic growth is predominant.”
While the report cited lower-than-expected U.S. production in cutting its forecast for supply growth, it added that it expects the U.S., along with Brazil and China among others, to be key drivers of growth.
Oil prices have suffered wild swings so far this month, with both the Energy Information Administration and the American Petroleum Institute signaling unseasonable builds in inventories amid what is typically the summer driving season.
Building supply and concerns about U.S.-Chinese trade have driven prices down in recent weeks, despite elevated geopolitical risk in the Strait of Hormuz.
Recent selloffs in oil markets have led to remarks out of Saudi Arabia, OPEC’s most influential constituent, that the regime was considering further action to stabilize markets, even after the bloc and its allies agreed last month to extend output cuts into their fourth year in an effort to support prices.
While OPEC’s report didn’t provide an official total production change for its own constituents, figures on individual nations showed Saudi Arabia’s output falling by 202,000 barrels a day in July, after a small rise in June, with Angolan and Venezuelan daily production dropping by 159,000 barrels and 141,000 barrels, respectively.
The only major production rise from OPEC nations came from Nigeria, where production rose by 146,000 barrels a day in July. The cartel has allowed certain nations—often in the grip of economic or political strife—de facto exemptions from production cuts, and Nigeria has typically been one of those nations.
Even with reduced output from Iran, under U.S. sanctions, and Venezuela, some analysts have suggested that OPEC will need to either more strictly enforce or deepen its agreed cuts to support prices.
Write to David Hodari at David.Hodari@dowjones.com
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