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Country Report 06 December 2018

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Report summary

The oil supply summary monthly report provides analysis on short-term global oil supply through 2019. The written document is accompanied by a related excel data download. Global supply growth remains strong as we head towards the OPEC meeting in Vienna this week. OPEC face the daunting challenge of non-OPEC growth close to 2.4 million b/d in 2019, against weakening demand. Our base case assumes that a moderate production restraint agreement will emerge from the meeting; a view that we have held for some time now, as without it, there will be a large-scale oversupply. We forecast total global supply in 2019 will increase by 1.5 million b/d year-on-year, far lower than the 2.5 million b/d growth expected in 2018. This assumes that key OPEC members and Russia cut around 1 million b/d through the first half of 2019 from October levels.

Executive summary
- Global supply: OPEC face challenge of more bullish non-OPEC outlook
- 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