OPEC expects supply glut next year, will probably extend OPEC+ pact in December
OPEC expects lower surplus in the oil market next year and that the demand for crude oil will fall as rivals increase production, reports Reuters. Both supply and demand concerns increase chances that the cartel will stand pat on current supply constraints at the meeting in December.
In the monthly bulletin, OPEC said that the demand for crude oil will average 29.58 million barrels per day, which is 1.12 million less than in 2019. This indicates a surplus of about 70 thousand barrels per day - less than in previous report. The drop in demand could lead to OPEC and its allies retaining supply constraints at the meeting on December 5 and 6. Nevertheless, the report contained positive forecasts of economic growth and growth in oil demand in 2020.
The report reflected the comments of OPEC Secretary General Mohammed Barkindo, who said that the forecast for 2020 may be eventually revised higher, referring to chances of the US-Sino trade deal and supply reductions in non-OPEC countries.
Since January 1, OPEC, Russia and other producers have signed an agreement to reduce production by 1.2 million barrels per day. In July, the OPEC+ alliance extended the pact until March 2020. Next high-level meeting is due in early December.
OPEC reduced its output growth forecast for 2020 for non-OPEC countries to 2.17 million barrels per day, which is 40 thousand less than in the previous forecast.
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