Macro Oils short-term outlook: November 2019 Report

Commodity Market Report 05 November 2019

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Report summary

Concern about global oil demand growth amid weakening global economic performance continue to have the largest effect on oil price. Fear of oversupply is more accurate than the reality of it, as yet. Our supply and demand forecast shows demand growth strengthening next year dramatically over 2019, to rise 1.4 million b/d, helping to absorb 2020’s surge in supply growth of 1.8 million b/d. For 2020, we forecast Brent to average $62 per barrel, $2 per barrel lower than an expected $64 per barrel for 2019. In H1 2020, a relatively large oversupply is forecast. OPEC next meet on 4-5 December in Vienna. The current production restraint agreement lasts until end March 2020 and the group is already floating the idea of deeper cuts in output than the current 1.2 million b/d total between OPEC and non-OPEC producers.

Sentiment over fundamentals?
Global supply
Non-OPEC: downgrade to US production outlook offset by strong ramp-up from Johan Sverdrup
US Lower 48: declining rig activity worsens outlook for 2020 growth
Other non-OPEC
OPEC: outlook unchanged ahead of the OPEC meeting in December
Global demand