Oil Price - Nov 14

[dan_s]

It is finally sinking in that U.S. shale oil production has flat lined and will likely go on decline in early 2020.
WTI is up over 50 cents per barrel in pre-market trading.

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 stabilization 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.

[dan_s]

My opinion is that EIA and IEA are doing all that they can to keep fuel prices low for as long as they can. The only reason that U.S. oil production will be up year-over-year is that we will be starting from a higher level at the beginning of the year. Just as it did this year, U.S. oil production is now likely to go down from December, 2019 to March, 2020. Because of the big decline in the active drilling rig count and winter weather, which always hampers well completions. - Dan

(Bloomberg) -- The pioneers of the U.S. shale boom are warning of a slowdown in oil production growth, but it appears the U.S. government doesn’t agree.

The Energy Information Administration revised up its forecast for the growth rate for crude output in 2020 to 1 million barrels a day from 910,000 barrels a day in October, according to the monthly Short-Term Energy Outlook on Wednesday. < How can production go up when there are almost 25% fewer rigs drilling for oil? The math just doesn't work.

The report came as a surprise given signs that companies are reining in spending to focus on shareholder returns rather than keep burning through cash.

“The EIA is not really convinced that’s the case,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. “It seems to me that they will walk those numbers down.”

Just hours earlier, Pioneer Natural Resources (NYSE:PXD) Co.’s Scott Sheffield expressed doubts that U.S. oil output will meet the latest growth forecasts made by the International Energy Agency as producers rein in spending, speaking in an interview on Bloomberg TV. The IEA said Tuesday that the U.S. will account for 85% of the growth in production worldwide to 2030.

And analysts at Goldman Sachs Group Inc (NYSE:GS). said they see U.S. output rising by 600,000 barrels a day next year, down from a previous estimate of 700,000 barrels.