Oil faces major hurdles amid slowing global growth: Emirates NBD

Brent crude futures will average around $65 a barrel in 2019, a decline of 9.5 percent year on year amid a weakening outlook for the global economy, Emirates NBD said in its investment outlook for 2019.

"Oil markets will be buffeted by a deteriorating outlook for the global economy and still rapid supply growth from producers like the US. Despite efforts by OPEC to cut production to try and stabilize markets, oil prices still face major challenges in getting back to 2018 peak levels," the bank noted.

The report stated that markets should be prepared to “endure substantial volatility in 2019 with considerable swings above and below its forecast.”

"We wouldn’t rule out Brent moving back below $50 a barrel or touching $ 80 a barrel," it added.

Meanwhile, oil demand growth is projected to underperform its long-term trend this year, expanding by 1.41 million barrels per day (mbd) compared with a 5-year average of 1.53 mbd (IEA projections).

While demand growth will be positive in most markets this year it will be at a slower pace in critical markets, the report added.

The US, representing more than 20 percent of global oil consumption, will see demand growth slow to around 200,000 barrels per day (bpd) compared with closer to 500,000 bpd estimated for 2018.

Consumption in China, which accounts for 13.5 percent of global oil demand, will remain positive but also a slower pace than in 2018.

Saudi Arabia, Canada, South Korea, Mexico and Iran will all report faster demand growth (or slower declines) but collectively they still represent less than China’s total share of demand, it added.