If OPEC doesn’t maintain its cuts, oil could stay low

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A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018. 

SEMrush

Essam al-Sudani | Reuters

A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018. 

Darling said factors that could keep oil prices weak in 2019 include sluggish demand for crude and the uncertainty over full compliance from OPEC members, including the largest producer Saudi Arabia, over the agreed 1.2 million barrels per day supply reduction.

In recent months, the Saudis increased production by more than 1 million barrels per day. Now, the kingdom will aim to cut about 900,000 barrels per day in just two months. With oil prices struggling, some have said the kingdom needs Brent crude to rise significantly to balance its budget.

Last year, oil prices suffered their worst annual loss since 2015 — Brent fell around nearly 20 percent while U.S. crude suffered a roughly 25-percent decline as stock market volatility, geopolitics and softening demand predictions roiled the energy market.

For his part, Darling said geopolitical risks in places such as Venezuela could also push oil prices up.

“In some parts of the world, you’ve still got aging oil infrastructure, which leads to unplanned maintenance. It only takes a few of these events and you suddenly get more support to the oil price,” he added.

J.P. Morgan said in November that Brent crude prices will average $73 a barrel in 2019, down from an earlier prediction of $83.50, in part due to North American supply ramping up in the second of the year.

— CNBC’s Tan Huileng and Tom DiChristopher contributed to this report.



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