Latest Market Commentary
January 21, 2019
The Baker Hughes Rig Count was released on Friday and total rigs declined by 25 and oil rigs declined by 21 to a total of 852, the largest one-week decline since February of 2016, close to the bottom of the last oil-price cycle.
The International Monetary fund cuts it forecast for the world economy, predicting that it will grow at the weakest pact in three years in 2019. They also warned that trade tension would be a future detriment to the negative outlook. This is IFM’s second downgrade in three months.
US manufacturing output increased by the most in 10 months in December, with a surge in the production of motor vehicles and a range of other goods. The Federal Reserve said that manufacturing production increased in December by 1.1%, the largest gains since February.
In its monthly report the IEA stated that if left its oil demand growth forecast unchanged for 2019, at 1.3 million bpd. The IEA warned of a mixed picture amid signs of slowing global economic growth this year.
The IEA reported that global refining capacity is set to increase at its fastest pace on record this year, possibly increasing stocks of products such as diesel, gasoline and marine fuel. Oil refining capacity is expected to increase by 2.6 million bpd and demand for refined products by 1.1 million bpd.
The IEA reported that OPEC substantially lowered its oil production in December. OPEC’s oil output in December fell by 590,000 bpd to 32.39 million bpd, its lowest level since July. The drop was driven by Saudi Arabia, with a cut of 420,000 bpd to 10.64 million bpd. Production reductions in Libya and Iran also contributed to the fall in OPEC output.