LONDON: OPEC warned on Tuesday that an oil supply glut could emerge in 2019 as the world economy slows and supply from rival producers rises more quickly than expected, building a case for cutting output at a meeting next month.
Worried by a price drop and rising supplies, OPEC is talking again of reducing production just months after increasing it. Such a shift would worsen relations with US President Donald Trump, who on Monday urged OPEC not to cut supply.
In a monthly report, the Organization of the Petroleum Exporting Countries said world oil demand next year would rise by 1.29 million barrels per day, 70,000 bpd less than predicted last month and the fourth consecutive reduction in its forecast.
Non-OPEC supply would rise by 2.23 million bpd, the Vienna-based organization said, 120,000 bpd more than previously thought.
“Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market,” OPEC said in the report.
“The recent downward revision to the global economic growth forecast and associated uncertainties confirm the emerging pressure on oil demand observed in recent months.”
Together with Russia and other non-OPEC producers, OPEC had agreed in June to boost supply after pressure from Trump to lower prices, partially unwinding output cuts that began in January 2017.
The group meets on December 6 to set policy for 2019.
OPEC warns of 2019 oil glut as demand slows, rival supply rises
OPEC warns of 2019 oil glut as demand slows, rival supply rises
- OPEC is talking again of reducing production just months after increasing it
- The group meets on December 6 to set policy for 2019
Silver crosses $77 mark while gold, platinum stretch record highs
- Spot silver touched an all-time high of $77.40 earlier today, marking a 167% year-to-date surge driven by supply deficits
- Spot platinum rose 9.8% to $2,437.72 per ounce, while palladium surged 14 percent to $1,927.81, its highest level in over 3 years
Silver breached the $77 mark for the first time on Friday, while gold and platinum hit record highs, buoyed by expectations of US Federal Reserve rate cuts and geopolitical tensions that fueled safe-haven demand.
Spot silver jumped 7.5% to $77.30 per ounce, as of 1:53 p.m. ET (1853 GMT), after touching an all-time high of $77.40 earlier today, marking a 167% year-to-date surge driven by supply deficits, its designation as a US critical mineral, and strong investment inflows.
Spot gold was up 1.2% at $4,531.41 per ounce, after hitting a record $4,549.71 earlier. US gold futures for February delivery settled 1.1% higher at $4,552.70.
“Expectations for further Fed easing in 2026, a weak dollar and heightened geopolitical tensions are driving volatility in thin markets. While there is some risk of profit-taking before the year-end, the trend remains strong,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Markets are anticipating two rate cuts in 2026, with the first likely around mid-year amid speculation that US President Donald Trump could name a dovish Fed chair, reinforcing expectations for a more accommodative monetary stance.
The US dollar index was on track for a weekly decline, enhancing the appeal of dollar-priced gold for overseas buyers.
On the geopolitical front, the US carried out airstrikes against Daesh militants in northwest Nigeria, Trump said on Thursday.
“$80 in silver is within reach by year-end. For gold, the next objective is $4,686.61, with $5,000 likely in the first half of next year,” Grant added.
Gold remains poised for its strongest annual gain since 1979, underpinned by Fed policy easing, central bank purchases, ETF inflows, and ongoing de-dollarization trends.
On the physical demand side, gold discounts in India widened to their highest in more than six months this week as a relentless price rally curbed retail buying, while discounts in China narrowed sharply from last week’s five-year highs.
Elsewhere, spot platinum rose 9.8% to $2,437.72 per ounce, having earlier hit a record high of $2,454.12 while palladium surged 14% to $1,927.81, its highest level in more than three years.
All precious metals logged weekly gains, with platinum recording its strongest weekly rise on record.
