Commodity Market Report

Macro Oils short-term outlook: OPEC faces the ultimate balancing act

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05 December 2018

Macro Oils short-term outlook: OPEC faces the ultimate balancing act

Report summary

World oil markets are taking a pause from the sharp downward adjustment made through November as OPEC ministers prepare to meet in Vienna this week. The outcome of the meeting is likely to have a material impact on prices. In this short-term outlook we assess two possible outcomes from the OPEC+ meeting. Our base case remains that key OPEC countries coupled with Russia and Oman push through a moderate reduction in output. But we also present a scenario in which a more aggressive production cut is agreed, with a more risky outcome that would lead to Brent prices strengthening back.

Table of contents

    • Global supply: all eyes on the outcome of the OPEC+ 6-7 December meetings as Qatar announces exit from the group
    • OPEC base case: moderate production cut assumed
    • OPEC could opt for deeper, more sustained cuts through 2019
    • Iran sanctions waivers push up 2019 exports
    • Non-OPEC supply: stronger US growth as Canada suffers from lack of takeaway capacity
    • Canada takeaway constraints prompt mandated cuts to 2019 production
    • Strong upward revisions to total US liquids supply
    • Lower 48 crude outlook shows strength despite weaker prices
    • Growth in global demand to remain steady through 2020. Low-GDP scenario highlights risk

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    Macro oils short term outlook December 2018 data.xlsx

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    Macro oils short term outlook December 2018 slide charts.xls

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    Macro Oils short-term outlook: OPEC faces the ultimate balancing act

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    Macro oils short term outlook December 2018 slide pack.pdf

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