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The Bullish surprise in OPEC's latest report



In its latest report before the December meeting, OPEC estimates demand for its crude oil next year will fall by 1.1 million bpd from 2019, and will fall below the cartel's October production, suggesting OPEC's picture of demand for crude will continue to show oversupply in 2020.

OPEC sees demand for crude oil at 29.6 million bpd for 2020, which is about 1.1 million bpd lower than projected average demand for 2019, the organization said in its closely monitored monthly oil market report on Thursday.

This year's demand for OPEC crude oil is seen at 30.7 million bpd, or 900,000 bpd lower than the demand for OPEC oil in 2018.

Expected demand for OPEC crude oil in 2020 is still 70,000 bpd below the cartel's the total production for October, so OPEC may have to consider at the beginning of December to cut even more production if it has any hope of balancing oil demand and supply.

However, such a decision can be difficult to make because deeper cuts will give a larger share of the market to the growing supply of oil without OPEC, mostly from the United States.

While numbers suggest an oversupply in OPEC's oil demand, the cartel appears to be making a case against deeper cuts as the outlook for next year sounds a little more bullish than previous pessimistic forecasts. Related: Aramco's Breakeven Costs are the Lowest in the World

First, unlike most of the recent reports, OPEC did not reconsider global oil demand growth estimates this time. Second, the cartel has slightly revised its estimates for oil supply growth without OPEC by 36,000 bpd to 2.1

7 million bd, mostly due to a 33,000 bpd downgrade for US US supply growth now to 1.5 bbd next year. [19659002] Finally, with a comment on global economic growth, a key indicator of what to expect from oil demand growth, OPEC said in its report today:

a potential deal on Brexit following the UK parliamentary election, fiscal stimulus in Japan, and stabilizing the downturn in large emerging economies could stabilize growth at the current forecast level. ”

By Tsvetana Paraskova for Oilprice.com

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