Opec oil cuts to restore price stability

The Organisation of the Petroleum Exporting Countries is heading into a contentious meeting tomorrow, with Iran promising to block any decision to increase output.

KUALA LUMPUR: The Opec decision to reduce the overall production of crude oil by 1.2 million barrels per day from October 2018 levels will help reduce concerns towards an oversupply situation.

PublicInvest research said oil prices will see some stabilisation at the current US$60 a barrel levels for 2019, supported by demand and supply fundamentals.

"Prices for Brent crude added 0.2%, while WTI slightly lower by -0.5% to USD61.67/bbl and USD52.61/bbl respectively post-OPEC meeting, but are still 7.8% and 12.9% lower YTD," it said.

The research house maintained its overweight stance on the sector on the basis of oil price stability encouraging greater levels of activity.

It added that world oil demand growth in 2019 is forecast to grow 1.29 barrels a day year-on-year with total world consumption reaching 100.08mil barrels a day. 

"The OECD region will contribute positively to oil demand growth, increasing by 0.25m bbls/d YoY, while the non-OECD region is assumed to see larger growth by 1.04m bbls/d in 2019."