Opec: Beware of crude glut

“Our expectation for oil prices in 2019 is also similar — somewhere between $70 to $75 a barrel. This assumes that demand will grow at roughly 1 per cent per annum,” she said.

Manoj Krishnan, head of private wealth at Continental Financial Services, thinks the single biggest issue for oil would be the trade war impact which is difficult to estimate at the moment. “We need at least one to two quarters and see the impact on the overall global economy.”

He forecast that technically the prices may range between $65 to $73 a barrel for the first half of next year before more clarity comes in.

Jameel Ahmad, global head of currency strategy and market research, FXTM, said the consensus coming out of the Opec meeting is that demand for oil will be somewhere around 31.5 million barrels per day next year, which is less than the current global output at around 33-34 million barrels per day. “The real production output at present could be higher than these levels. Overall, the market environment and circumstances surrounding oil remain unpredictable with these conditions changing rapidly, with this being why the oil price is behaving so erratically in recent weeks,” he said.

Ahmad said demand is likely to be one of the main factors that will dictate market fluctuations in the oil markets heading into next year.

He noted that warnings are being aired about slowing economic growth, meaning that there are risks of less demand for oil next year as a result of a slowdown in global economic conditions but this hasn’t quite yet been fully factored into the oil price.

On Tuesday, the International Energy Agency forecast that demand for oil will peak in 2040. But it warned that the world could face a supply crunch without enough investment in new production.

The IEA said there will be 300 million electric vehicles on the road by 2040. It expects those vehicles will cut demand by 3.3 million barrels per day, up from its previous estimated loss of 2.5 million bpd in its last World Energy Outlook.

The IEA predicted that natural gas will overtake coal as the world’s second largest energy source after oil by 2030. Global gas demand will increase by 1.6 per cent a year to 2040 and would be 45 per cent higher by than today. China, the world’s biggest oil and coal importer, will soon become the largest importer of gas, it said.

Demand for oil will be somewhere around 31.5 million barrels per day next year, which is less than the current global output at around 33-34 million barrels per day

Jameel Ahmad, Global head of currency strategy and market research, FXTM