IEA: Opec cuts hit the spot as oil set to stabilise at $60 per barrel

A cut in output from oil-producing cartel Opec will hit the spot as oil prices look set to stabilise at a floor of around $60 per barrel after a volatile year, the International Energy Agency said today.

Prices hit a year high of $86 in early October as investors feared supplies would drop as the US re-imposed sanctions against Iran.

However, ramped up production from the US and Russia more than made up for the fall.

Now the IEA projects that supply from non-Opec countries will rise by 2.4m barrels per day (bpd) in 2019, close to the cartel’s own prediction of a 2.5m rise. However, this is a reduction of 415,000 bpd from previous estimates as Russia and Canada made moves to slow production earlier this month.

Opec and its allies, including Russia, agreed they could collectively slow output by 1.2m bpd, with non-Opec countries accounting for 400,000 bpd of that.

The group met in Vienna amid news that US shale has helped the country become a net exporter of crude oil for the first time since the beginning of the 1990s.

Increased domestic production has allowed the US to cut imports from 11.1m bpd a decade ago to 3.1m on average so far this year, the IEA said. It has also beaten off its two closest rivals, Russia and Saudi Arabia, to clinch the spot as the world’s biggest oil producer.

Meanwhile, Alberta, Canada’s premier oil producing province, said it would cut output by 8.7 per cent, or 325,000 bpd, in a bid to drive up prices.

Limited pipeline space had caused production in the province to grow faster than it could be exported, costing the economy billions of dollars.

The growth in demand will increase by seven per cent next year as some of the boost from low prices will be cancelled out by slower economic growth, the IEA said.

“For 2019, our demand growth outlook remains at 1.4m bpd even though oil prices have fallen back considerably since the early October peak. Some of the support provided by lower prices will be offset by weaker economic growth globally, and particularly in some emerging economies,” it said.

Brent Crude was down 0.57 per cent in the early afternoon.