By Alex Lawler
LONDON (Reuters) – OPEC on Thursday pointed to a smaller surplus in the oil market next year although it still expects demand for its crude to drop as rivals pump more, building a case to maintain supply curbs at a meeting next month.
In a monthly report, the producer group said demand for its crude will average 29.58 million barrels per day (bpd) next year, 1.12 million bpd less than in 2019. That points to a surplus of about 70,000 bpd next year, less than in previous reports.
The drop in demand could press the case for the Organization of the Petroleum Exporting Countries and its allies to maintain supply curbs at a meeting on Dec. 5-6. Still, the report kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.
“On a positive note, signs of improving trade relations between the U.S. and China, a potential agreement on Brexit after the UK’s general election, fiscal stimulus in Japan, and a stabilisation of the downward slope in major emerging economies could stabilize growth at the current forecast level,” OPEC said in the report.
The report echoes comments from OPEC Secretary General Mohammad Barkindo, who has been saying the outlook in 2020 could surprise to the upside, citing prospects for a resolution of the trade dispute and lower non-OPEC supply.
OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 and ministers meet to review policy on Dec. 5-6.
While the demand for OPEC crude will drop next year, OPEC trimmed its forecast for growth in 2020 non-OPEC supply to 2.17 million bpd, down 40,000 bpd from previous forecast.
OPEC said its oil output in October jumped by 943,000 bpd to 29.65 million bpd, according to figures the group collects from secondary sources as Saudi supply recovered from attacks on oil plants that cut supply.
The report suggests there will be a 2020 surplus of 70,000 bpd if OPEC keeps pumping at October’s rate and other factors remain equal, less than the 340,000 bpd surplus implied in September’s report before the Saudi attacks.
(Editing by David Evans)