Despite the OPEC+ cuts, the oil market continues to be dealing with a supply surplus in 2020, based on a new report from the International Energy Agency (IEA).
OPEC+ introduced further cuts of 500,000 bpd, which sounds extra spectacular than it’s as a result of the group was already producing underneath its restrict. In November, for instance, OPEC was producing 440,000 bpd under the agreed-upon ceiling.
Saudi Arabia agreed to shoulder an additional 400,000 bpd of voluntary cuts. However, the deal additionally exempts 1.5 million barrels per day (mb/d) of Russia’s condensate production, permitting Russia to improve condensate output by 0.8 mb/d truly.
OPEC stated in its personal report that the oil market could be largely in steadiness in 2020, albeit with a brief glut within the early a part of the year. The IEA sees inventories constructing at a fee of 0.7 mb/d within the first quarter.
The IEA cut its forecast for non-OPEC to provide growth from 2.3 mb/d to 2.1 mb/d because of weaker growth from Brazil, Ghana, and the US. The U.S. sometimes will get the entire consideration, however disappointing information from Brazil and Ghana additionally led the IEA to revise forecasts lower.
Notably, Tullow Oil revealed a serious disappointment from its Ghana operations, causing a whole meltdown in its share worth this week. Its stock fell almost 70 % in a single day as traders overhauled their valuation of the corporate. Tullow admitted that it’s manufacturing from Ghana would decline within the years ahead.
The agency sees U.S. production growth of only 440,000 bpd in 2020, earlier than flattening out in 2021. If this proves correct, OPEC+ may not want to fret as a lot.