OPEC Sees Smaller 2020 Oil Surplus Ahead of Policy Meeting

OILMONSTER.COM- OPEC said on Thursday it expected demand for its oil to fall in 2020 as rivals pumped more despite a smaller surplus of crude in the global market, building a case for the group to maintain supply curbs when it meets to discuss policy next month.

In its last monthly report before the Dec. 5-6 talks, OPEC said demand for its crude would average 29.58 million barrels per day (bpd) next year, 1.12 million bpd less than in 2019.

That points to a 2020 surplus of about 70,000 bpd, which is less than indicated in previous reports.

The drop in demand could encourage the Organization of the Petroleum Exporting Countries and its allies to keep supply curbs in place when they gather in Vienna. But the report kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.

“On a positive note, signs of improving trade relations between the U.S. and China, a potential agreement on Brexit after the UK’s general election, fiscal stimulus in Japan, and a stabilisation of the downward slope in major emerging economies could stabilise growth at the current forecast level,” OPEC said in the report.

The report echoes comments from OPEC Secretary General Mohammad Barkindo, who has said the outlook in 2020 could surprise to the upside, citing prospects for a resolution of the U.S.-Chinese trade row and lower non-OPEC supply.

A brighter outlook would lessen the case for the producers, known as OPEC+, to deepen their supply cuts. Barkindo said in October all options, including deeper cuts, were open although in recent comments he has downplayed reducing output further.

Oil prices were steady after the report’s release, trading near $63 a barrel, below the level some OPEC officials say they favour.

OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. In July, the alliance, known as OPEC+, renewed the pact until March 2020.

The report said oil inventories in developed economies fell in September, a trend that could ease OPEC concern about a glut. But stocks still exceeded the five-year average, a measure OPEC watches closely, by 28 million barrels.

Courtesy: www.reuters.com