• 4 minutes "Natural Gas Trading Picks Up Considerably Amid High Volatility" by Charles Kennedy - ...And is U.S. NatGas Futures dramatically overbought at the $6.35 range?
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 day Revisiting: "The U.S. Grid Isn’t Ready For A Major Shift To Renewables" from March 2021 by Irina Slav at OILPRICE
  • 4 days How cheap Chinese tires might explain Russia's 'stalled' 40-mile-long military convoy in Ukraine
  • 9 hours Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65
  • 2 days Natural Gas is the Cleanest and most Likely Source of Energy to Fuel the World.
  • 8 days Will Variants and Ill-Health Continue to Plague Economic Outlooks?
  • 8 days "Russia will stop 'in a moment' if Ukraine meets terms - Kremlin" by Reuters via Yahoo News...but Reuters suddenly cut out the balanced part of the story.
U.S. Shale Drillers Cautious Despite Record Earnings

U.S. Shale Drillers Cautious Despite Record Earnings

U.S. shale drillers are publishing…

Is Energy Security More Important Than Climate Change?

Is Energy Security More Important Than Climate Change?

Russia’s war has highlighted vulnerabilities…

Rystad Energy

Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products. Rystad Energy’s…

More Info

Premium Content

Global Oil Inventories Set To Soar As OPEC Fails To Take Action

The coronavirus outbreak in China will curb global oil demand growth by at least a quarter this year, and the production cuts of 600,000 barrels per day (bpd) proposed by an OPEC+ committee are far from enough to balance the market, a Rystad Energy analysis shows.

Both the first and second quarters of 2020 will see global oil production surpluses. Our estimate shows that the first quarter of the year will see producers left with a stock build of 700,000 bpd. Our previous estimate was for a more or less balanced first quarter with a 100,000 bpd surplus.

The second quarter threatens to build oil stocks by 1.3 million bpd unless production is reduced further. That means that even if the OPEC+ output cuts are implemented in the second quarter, there will still be a sizeable surplus of 700,000 bpd.

“The economic shut-down in China will cause the largest negative oil demand shock since 2008. Even though the chaos unfolding in Libya has wiped out most of its oil production, and even if OPEC’s output cuts are fully applied, they will not be enough to fill the demand gap now exacerbated by the coronavirus,” said Bjørnar Tonhaugen, Rystad Energy’s Senior Vice President and Head of Oil Markets.

For the rest of the year, the third quarter looks a bit better for balances as we expect some pent-up demand growth in China to emanate in both products and crude. However, fourth quarter balances suggest continued pressure on the market and OPEC+ despite the warranted extension of the current output agreement through year-end. Related: Oil Recovers From Last Night’s Nosedive

Rystad Energy’s estimate is based on our expectation of a speedy peace negotiation in Libya, which will mean a subsequent restart of oil production that will bring about 1 million bpd of crude oil production back to the market from March. Libya’s output is currently constrained to a mere 180,000 bpd.

As a result of the expected imbalance, we see downside risk to our $58 Brent base case for 2020. Due to the uncertainty of the duration and related consequences of the coronavirus outbreak in China, we identify additional risk that could potentially widen the global supply surplus and downgrade our oil price forecast.

In the meantime, we will continue to monitor the impact from the coronavirus on supply-demand fundamentals and will issue market updates as events unfold.

By Rystad Energy

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News