Producer cuts are set to boost the oil market in 2019, data firm projects

  • Crude oil will remain oversupplied in the first quarter of 2019 as the market works through stocks, said energy information provider, Argus Media.

An oversupply of oil will continue to pressure prices into the first quarter of 2019, but producer cuts will eventually boost crude price as the year progresses, according to Argus Media, an energy information provider.

That is, supply and demand should rebalance by the second quarter of next year, said Azlin Ahmad, editor for crude oil at Argus.

Since climbing to four-year highs in early October, the price of crude futures have crashed by more than a third. The latest wave of heavy selling comes at a time when the energy market as well as the global economy is gripped by a flurry of bearish factors.

Brent oil futures, the international benchmark were trading around $53.60 per barrel on Monday, representing an almost 20 percent decline in 2018.

But prices are likely to pick up next year as supply cuts by the Organization of the Petroleum Exporting Countries. The cuts are scheduled to take effect in January.

OPEC and allied non-OPEC oil producers including Russia agreed at the start of December to curb output by 1.2 million barrels a day. That's equivalent to more than 1 percent of global demand, in a bid to drain tanks and boost prices.

The 15-member organization said it would reduce its output by 800,000 barrels a day, while Russia and the allied non-OPEC producers will contribute a 400,000 barrels daily reduction.

Argus forecasts Brent crude to trade around $65 per barrel in the first quarter, rising to $68 in the second quarter and reaching the low $70s in the third quarter. Prices will breach $80 a barrel in the fourth quarter of 2019, Ahmad projected.

Average Brent oil prices will be below $70s in the whole of 2019, according to Argus' forecast.

—CNBC's Sam Meredith contributed to this report.