OPEC estimates oil demand will drop by 1.12 million barrels in 2020


The Organization of Petroleum Exporting Countries (OPEC) anticipated a lower surplus in the oil market for 2020.

In its monthly report, the organization predicts that demand for OPEC oil will decrease and production in other countries will grow in the course of the following year.

In detail, the OPEC says demand will stand at around $29.58 million barrels per day (mbd), down by 1.12 million from 2019. This estimate represents a surplus of approximately 70,000 barrels in 2020.

In September, the cartel’s supply went down by 4.3% to an average 28.5 million barrels per day, due to a drop in Saudi oil production caused by the attack on its main facilities.

Other influencing factors include low production at Venezuela and Iran, reaching 0.64 and 1.16 mbd, respectively. However, in October OPEC production rose by 943,000 barrels to 26.65 million barrel per day thanks to the recovery of Saudi supply and an increase of Venezuelan production by 42,000 barrels.

Greater production from non-OPEC members

The report points to a 2020 surplus of about 70,000 bpd if the OPEC continues to pump at the same rate as in October and other variables remain still, less than the 340,000 surplus implied in the September report prior to the attacks on Saudi facilities.

Non-OPEC producers – like Russia, the United States, Canada and others – are expected to significantly increase production, with their joint output going up to 1.82 this year and 2.17 in 2020.

With this, the output from non-OPEC countries would stand at an average of 64.3 mbd this year and 66.46 mbd next year.

Positive signs

According to OPEC analysts, who coincide with the International Monetary Fund (IMF), the global economy’s growth forecast remains unchanged, with 3.0% by 2019 and 2020, as estimated a month ago.

The report highlights “positive signs” in the global context, such as an improvement in U.S.-China trade relations or the possibility to negotiate a solution for the UK’s exit from the European Union.

“On a positive note, signs of improving trade relations between the US and China, a potential agreement on Brexit after the UK’s general election, fiscal stimulus in Japan, and a stabilization of the downward slope in major emerging economies could stabilize growth at the current forecast level,” the publication stated.

The moment to invest

OPEC Secretary-General Mohammed Barkindo said there is potential for upstream in both global economic growth and global demand, citing the possible resolution of the trade dispute and decreased supply from non-OPEC nations.

In Abu Dhabi, Barkindo called the organization’s members to increase investments in the oil and gas sector.

All this will require huge investments with new barrels needed to not only increase production, but also to accommodate for decline rates from existing fields,” he stressed.

The official added that investors should focus on “a long-term perspective” and not base their decisions on analytical studies.

He spoke about the efforts to balance the market and recalled that the OPEC and its strategic partners will meet again on December 6 in Vienna.

At the 176° Ministerial Conference in July, the members voted to extend the production limit until the end of March 2020.

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