Oslo, June 18 - Neftegaz.RU. Even though a production increase is off the cards without influencing prices, Rystad Energy said that the production cuts required by OPEC+ to support prices need not be as much as 1.5 mbpd.
According to the intelligence firm, that is contrary to what traditional supply-demand balances suggest, owing to a tight market for medium and heavy barrels and the fast-approaching shipping fuel changes known as IMO 2020, which are expected to cause an increase in crude demand.
Disappointing global demand and strong production growth in the U.S. are also weighing on OPEC+’s decision, which may be postponed to early July.
Ahead of the 6th OPEC Ministerial Meeting, Austria, Rystad´s chief oil market analyst Bjørnar Tonhaugen said: “We expect crude demand to accelerate thanks to the upcoming IMO 2020 regulations later this year, and OPEC will likely not have to cut production as much as the call on OPEC suggests. Having said that, there will not be room for the cartel to increase output for the rest of 2019 in our view.”
Rystad’s supply-demand forecast suggests that the so-called call on OPEC production will decline by 1.5 million bpd to 29.0 million bpd from the 2nd quarter to the 4th quarter of 2019.
OPEC+ account for nearly 49 million of the 84 million bpd of global crude and condensate production expected to be produced on average in 2019.
“We expect non-OPEC+ production to grow by 1.9 million bpd year-on-year in 2019, driven by the continued rise of the U.S. shale industry, whereas global demand is expected to grow only by between 1.1 million and 1.2 million bpd year-on-year.
“In other words, as non-OPEC+ adds more supply than global demand is increasing by, OPEC+ will still be pressured to manage production to balance the global market,” Tonhaugen added.
A forecast by Rystad Energy stated that U.S. oil production would grow by 1.6 million bpd y/y in 2019, with monthly production reaching 13.4 million bpd by December 2019.