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The Joint Ministerial Supervisory Committee (JMMC), established by OPEC and non-OPEC oil- producing countries, said on Sunday that as global crude oil production continues to grow and demand is unstable, the crude oil market may again be oversupply next year. The commission, composed of several OPEC members and other crude oil exporters, said a larger group of about 20 countries might have to launch a new round of production cuts in order to maintain a balanced crude oil market. The announcement comes at a time when U.S. crude oil futures fell into a bear market as the supply of crude oil increased globe valve inspection and demand prospects weakened, leading to a sharp fall in oil prices. The committee's bulletin system proposes a potential cut in production that could be reached at the group's meeting next month.
In January 2017, OPEC and some oil-producing countries, including Russia, began to cut production to ease the oversupply that led to oil prices falling from more than $100 to less than $30 a barrel. In June this year, with oil prices hitting a three-and-a-half-year high, the organization agreed to restore some of its output after member countries cut production more than expected. Since then, the world's three largest oil producers - the United States, Russia and Saudi Arabia - have set new production records. Meanwhile, Global trade tensions, rising interest rates and weakening currencies in emerging markets have raised concerns about slowing global economic growth and slowing oil demand.
Last month, the oil union's production quota compliance committee said the group might have to reverse course and resume production cuts. The committee said on Sunday that the current situation "may need new strategies to balance the market." The Joint Ministerial Supervisory Committee said: "The Committee reviewed the current supply and demand fundamentals of crude oil and noted that the outlook for 2019 indicates that supply growth will exceed global demand in view of current uncertainties." "The Committee also notes that the restrained prospects for global economic growth, coupled with related uncertainties, may have an impact on global crude oil demand in 2019 and may lead to a widening gap between supply and demand." Saudi energy minister Khalid Al Falih said that as OPEC's largest oil producer and the world's largest exporter of crude oil, Saudi Arabia plans to reduce production by 500,000 barrels a day in December. He told CNBC on Sunday that the market overreacted last month, pushing oil prices to a 4 year high. But oil prices have fallen by more than 20% in the past five weeks, suggesting investors are overreacting in the opposite direction. Alexander Novak, Russia's energy minister, said Sunday that he did not believe the oil market would oversupply in 2019. Russia is the second largest oil producer in the world after the United States, and plays an important role in the oil alliance with Saudi Arabia.