OPEC Cut Global Forecast For 2020
|
OPEC has cut its forecast
for growth in world oil demand in 2020 due to an economic slowdown. This
outlook the group says highlighted the need for ongoing efforts to prevent a
new glut of crude.
In its monthly report,
the Organization of the Petroleum Exporting Countries says oil demand
worldwide would expand by 1.08 million barrels (bpd)per day. This is 60,000
bpd less than previously estimated, and indicated the market would be in
surplus.
The weaker outlook amid a
U.S.- China trade war and Brexit could press the case for OPEC and its allies
to maintain or adjust their policy of cutting output. Iraq said ministers
would on Thursday discuss whether deeper cuts were needed.
OPEC, in the report,
lowered its forecast for world economic growth in 2020 to 3.1% from 3.2% and
said next year’s increase in oil demand would be outpaced by “strong growth”
in supply from rival producers such as the United States.
OPEC, Russia and other
producers have since Jan. 1 implemented a deal to cut output by 1.2 million
bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020
and a committee reviewing the pact meets on Thursday.
Oil prices pared an
earlier gain after the report was released to sit just below $63 a barrel.
Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above $75,
pressured by trade concerns and an economic slowdown.
OPEC and its partners
have been limiting supply since 2017, helping to clear a glut that built up
in 2014-2016 when producers pumped at will, and revive prices.
The policy has given a
sustained boost to U.S. shale and other rival supply, and the report suggests
the world will need less OPEC crude next year.
Demand for OPEC crude
will average 29.40 million bpd in 2020, OPEC said, down 1.2 million bpd from
this year.
OPEC adds that its oil
output in August rose, however, by 136,000 bpd to 29.74 million bpd according
to figures the group collects from secondary sources. It was the first
increase this year. Saudi Arabia, Iraq and Nigeria boosted supply.
Saudi Arabia, a major
producer told OPEC that the kingdom raised August output by just over 200,000
bpd to 9.789 million bpd. Saudi Arabia continues to pump far less than its
quota of 10.311 bpd.
Thanks in part to Saudi
restraint, producers are still over-complying with the supply-cutting deal.
Losses in Iran and Venezuela, two OPEC members facing U.S. sanctions, have
widened the supply reduction. August’s increase, however, puts OPEC output
further above the 2020 demand forecast.
The report suggests there
will be a 2020 supply surplus of 340,000 bpd if OPEC keeps pumping at
August’s rate and other things remain equal, more than the surplus forecast
in last month’s report.
|
Comments
Post a Comment