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Oil prices are likely to remain steady this year as supply shocks from Saudi Arabia fail to lift prices in a market grappling with flagging demand, a Reuters survey showed on Monday, as warnings of a global economic deceleration mount. The survey of 53 economists and analysts forecast Brent crude would average $65.19 a barrel in 2019, little changed from $65.02 forecast last month. This was however, slightly higher than the $64.76 average for the global benchmark so far this year.

West Texas Intermediate crude futures were seen averaging $57.96 per barrel against last month's $57.90 forecast. WTI prices have averaged $57.11 so far this year. "The oil market is facing challenging times. Recent attacks on oil facilities in Saudi Arabia have painfully demonstrated the risks to oil supply, which is why short-term price spikes are possible at any time," said Carsten Fritsch, senior commodity analyst at Commerzbank.

"The oil market fundamentals, on the other hand, are deteriorating. Demand growth is weakening, oil supply outside Opec is rising significantly and Opec+'s production discipline has recently faded ... We therefore do not consider the recent price surge to be sustainable."

Brent prices posted their biggest one-day price jump in 30 years after an attack on Saudi Aramco facilities earlier this month halved crude oil supply from the world's top oil exporter.

The attacks spurred market uncertainty and ratcheted up tensions in a region already on edge from the lingering rivalry between the kingdom's ally the United States and Iran.

"Ultimately, the impact of the drone strikes on oil prices will depend on two main factors: how long it takes for Saudi to bring these facilities back on stream, and whether or not further direct strikes are carried out," said Cailin Birch, an analyst at the Economist Intelligence Unit.

Despite the attacks, most analysts said the Organization of the Petroleum Exporting Countries, with Saudi as the de facto leader, could extend the output cuts until the end of next year, and sanctions on Iran and Venezuela were unlikely to ease soon.

While there is enough spare capacity to compensate for the lost production, analysts said the festering US-China trade dispute, along with robust output from non-Opec countries, will keep oil prices in check over the long term.

Analysts expect growth in global oil demand to range between 0.9-1.3 million bpd in 2019 and 0.8-1.5 mbpd next year.

The US Energy Information Administration cut its 2019 world oil demand growth forecast for an eighth straight month in September to 0.89 million barrels per day.

On the supply side, non-Opec production would continue to rise, poll respondents said, with United States dominating the global supply growth with modest increases from Brazil, Norway and Mexico.

"If Trump remains the frontrunner, expectations for US production to rise to fresh record highs will continue with 2020 possibly topping 13.5 million bpd," said Edward Moya, a senior market analyst at OANDA. "Trump's pro-energy policies will remain very supportive for US becoming the world's top oil exporter."

Copyright Reuters, 2019

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