PARIS: Organisation of the Oil Exporting Countries (OPEC) has raised its 2020 estimate for growth in global demand for oil, while noting that increased output from non-OPEC members would probably more than make up for it.
The oil cartel now expects demand for crude oil to grow by 1.22 million barrels per day from last year´s level, a slight increase of 140,000 b/d from OPEC´s previous outlook.
Total demand would rise from 99.77 mb/d last year to 100.98 mb/d, the Vienna-based organisation said in its monthly oil report.
It said the revised forecast was due for the most part to “an improved economic outlook for 2020.” The global economy is expected to expand by 3.1 percent this year, slightly stronger than the 2019 estimate of 3.0 percent, OPEC said.
Meanwhile, crude oil production by non-OPEC members such as Guyana, Mexico and Norway would likely grow by even more, it added.
The cartel figured that output by non-OPEC members would increase by 2.35 mb/d to reach 66.68 mb/d.
OPEC and allied countries that include Russia agreed in December to curb crude oil production to keep prices from plunging, and a cut of 161,000 b/d brought their total production to 29.444 mb/d according to non-OPEC sources cited in its report.
The United States, which has seen its output soar in recent years powered by shale, will see total liquids output exceed a 20 million barrel per day (bpd) milestone for the first time. U.S. liquids output will reach 20.21 million bpd in the fourth quarter of 2020 – almost meeting U.S. demand of 21.34 million bpd, OPEC said.
It lowered its 2020 demand forecast for OPEC crude by 0.1 million barrels per day. That would be around 1.2 million bpd lower than in the whole of 2019 and in line with December production, when OPEC’s share of global output fell 0.1 percentage point month on month to 29.4 percent. “The continued accommodative monetary policies, coupled with an improvement in financial markets, could provide further support to ongoing increases in non-OPEC supply,” OPEC said.
OPEC and some non-OPEC allies such as Russia have been curbing production to prevent an oil glut and support oil prices above $60 per barrel. Their current deal expires in March.
“The collaboration between OPEC and non-OPEC producing countries remains essential in maintaining stability in the oil market,” OPEC said.
Meanwhile, key OPEC Gulf member the United Arab Emirates and the group’s ally Russia said on Wednesday they were still committed to meeting in March to decide on future production policies.
Citing an unnamed source, Russian news agency Tass reported that OPEC and its allies, known as OPEC+, have started consultations on extending the current output-cutting deal until June without holding a meeting in March.
“No one approached us officially or unofficially… We’re assuming, that there are agreements, that we meet in March”, Russian energy minister Alexander Novak told reporters.
“Our meeting is near, in March. My expectations are for the meeting to be a positive meeting,” UAE’s energy minister Suhail al-Mazrouei told reporters.
The energy minister of de facto OPEC leader Saudi Arabia, Prince Abdulaziz bin Salman, also said on Monday that OPEC+ will meet in March and it was too early to say what decision it would take.
OPEC and its allies agreed in December to reduce supply by 1.7 million bpd in 2020. The pact expires at the end of March as Russia had insisted it wanted the current deal to last only three months.
Saudi Arabia was keener for the deal to last longer, according to OPEC+ sources. It would be very unusual, if not unprecedented, for OPEC to extend production cuts without holding a meeting, three OPEC sources said.