11 Jul OPEC report forecasts lower demand for its oil in 2020
The Organization of the Petroleum Exporting Countries (OPEC) has forecasted that world demand for its crude will decline next year as the US shale industry continues to pump more oil, threatening another surplus.
Providing its first forecasts for next year in a monthly report, OPEC said 29.27 million barrels per day (bpd) will be required from the 14-member cartel in 2020, around 1.34 million bpd lower than this year.
However, global oil demand will continue to grow at the same pace as this year in 2020, according to OPEC, at a rate of 1.1 million bpd. Meanwhile, supplies from non-OPEC countries, predominantly the US, will increase by 2.4 million bpd next year.
“US tight crude production is anticipated to continue to grow as new pipelines will allow more Permian crude to flow to the US Gulf Coast export hub,” said OPEC, referencing the US shale sector.
The report comes a week after OPEC and its allies agreed to extend a supply cuts pact until March 2020, in a bid to prevent a build-up of inventories that could push prices down.
However, if OPEC continues to produce at the rate of 29.83 million bpd recorded last month, a supply surplus of over 500,000 bpd will emerge in 2020, based on its latest demand forecasts.