Commodity Market Report
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
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Executive summary
- 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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