OPEC pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.
In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (BPD) next year. In November, OPEC pumped less oil than the average 2020 requirement, having in previous months supplied more.
OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook. “On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020,” the report said.
The Organization of the Petroleum Exporting Countries, Russia, and other producers, a group is known as OPEC+, have since Jan 1 implemented a deal to cut output by 1.2 million BPD to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 BPD from Jan 1, 2020.
The report showed OPEC production falling even before the deal takes effect. In November, OPEC output fell by 193,000 BPD to 29.55 million BPD, according to figures the group collects from secondary sources, as Saudi Arabia cut supply.
That suggests there would be a 2020 deficit of 30,000 BPD if OPEC kept pumping at November’s rate and other factors remained equal, less than the 70,000 BPD surplus implied in November’s report.