"On the one hand oil demand growth for 2019 has been downgraded for the
second month in a row and the IEA notes that "world trade growth has
fallen back to its slowest pace since the financial crisis ten years
ago"
Tighter oil market could be 'short-lived' on 2020 non-OPEC supply: IEA
IEA cuts 2019 oil demand growth again to 1.2 mil b/d but remains upbeat
IEA sees stronger 2020 oil demand growth of 1.4 mil b/d on petrochemicals
IEA calls on OPEC crude to fall 650,000 b/d in 2020 from May levels
BUT TENSIONS ARE MOUNTING
Singapore —
OPEC will have an uphill battle if it wants to keep oil markets
balanced next year as a potentially tighter oil market in the second
half of 2019 starts to wash away on a wave of non-OPEC supply.
The International Energy Agency's June Oil Market Report predicts a
surge in US shale next year along with strong crude oil contributions
from Canada, Brazil and Norway. This translates to non-OPEC supply
growth accelerating from 1.9 million b/d this year to 2.3 million b/d in
2020.
"A clear message from our first look at 2020 is that there is
plenty of non-OPEC supply growth available to meet any likely level of
demand, assuming no major geopolitical shock, and the OPEC countries are
sitting on 3.2 million b/d of spare capacity," the IEA said.
Indeed, the IEA has called on OPEC crude to drop to 29.3 million
b/d in 2020, 650,000 b/d below the May output level. OPEC's May supply
fell to its lowest since 2014 as Iranian supply plunged to 2.4 million
b/d due to sanctions -- a number not seen since the late-1980s and on
lower Saudi Arabian as well as Nigerian output.
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