The oil market outlook for 2020 may have upside potential, the secretary-general of producer group OPEC said today, appearing to underplay any need to cut output more deeply.
Mohammad Barkindo said he was more optimistic about next year’s outlook than he had been last month, when he said all options, including a deeper cut to oil output amid oversupply predictions, were being looked at. He told a briefing:
“Based on the preliminary numbers, 2020 looks like it will have upside potential. There are definitely brighter spots. The numbers are looking more refined and the picture is looking brighter.”
“The other non-fundamental factors like trade issues that have been impacting negatively on the global economy, the news coming out is more optimistic. We have seen the biggest economy in the world, the United States, continuing to defy projections, racing ahead.”
Oil prices rose more than one per cent today amid hopes that Washington could roll back some of the tariffs it has imposed on Chinese imports.
The comments come on the same day OPEC released its 2019 World Oil Outlook, which said the group would supply a decreasing quantity of oil in the next five years in the face of rising output of US shale and other rival sources.
The report says OPEC’s production of crude oil and other liquids is expected to decline to 32.8m barrels per day (bpd) by 2024, compared with 35m bpd in 2019.
Rising climate activism in the West and widening use of alternative fuels are placing long-term oil demand under increasing scrutiny.
OPEC and its allies, led by Russia, meet in December. The so-called OPEC+ alliance, seeking to boost oil prices, has since January implemented a deal to cut output by 1.2m bpd until March 2020.
OPEC’s figures suggest there will be excess supply next year due to rising production outside the group. On whether the market looked oversupplied for next year, Barkindo said: “We are not there yet. We will not be able to at this point preempt all the steps that we are working through.”
Earlier, Barkindo also said Brazil would be welcome to join the 14-country oil producer group but that the South American country had not yet made an official approach.
In October Brazil’s president, Jair Bolsonaro, said he wanted his country to join OPEC, a move that would add the most significant new producer to the oil cartel for years but met with scepticism in Brazil’s energy industry.
Main image credit: Getty