OPEC makes big cuts to oil production

OPEC SAID on Tuesday it had cut oil production steeply under a global supply deal, although it flagged headwinds confronting its efforts to prevent a glut this year including weaker demand and higher rival output.

In a monthly report, OPEC said its oil output fell almost 800,000 barrels per day in January to 30.81 million bpd. That is still slightly more than the expected 2019 demand for OPEC crude, which the producer group lowered to 30.59 million bpd.

Worried by a drop in oil prices and rising supplies, the Organization of the Petroleum Exporting Countries and its allies including Russia agreed in December to return to supply cuts. OPEC is lowering output by 800,000 bpd.

In the report, OPEC cut its forecast for 2019 world economic growth by 0.2 percentage point to 3.3 per cent and highlighted a range of headwinds, including a slowdown in global trade.

“Some recent positive developments could support the global economy at its current level, including the recovery in oil prices, possible progress in US-China trade negotiations and less-ambitious monetary tightening by the US Federal Reserve,” OPEC said.

“Nevertheless, this would not lift the global economy beyond the growth forecast.”

With the supply cut delivered in January, OPEC has achieved 86 per cent compliance with pledged reductions.