OPEC's Oil Market Outlook Report - July 11

[dan_s]

Notes below are from TPH

OPEC published its monthly oil market report yesterday with non-OPEC 2019 supply revised ~100,000 bpd lower, June OPEC production was ~70,000bpd lower, and 2019 demand expectations unchanged at +1.14mmbpd.
On the supply slide, downward revision to 2019 output was driven by recent extension of OPEC+ production cuts along with soft Q2 volumes in Brazil and Russia.
In June, we saw OPEC volumes decline once again (-68mbpd) driven by big declines in Iran (-147mbpd following -230mbpd last month) along with smaller reductions in Angola (-57mbpd), Libya (-58mbpd) and Iraq (-27mbpd), somewhat offset by higher volumes in Saudi (+126mbpd) and Nigeria (+129mbpd).
OPEC also published a highly bearish 2020 outlook with non-OPEC supply growth coming in hot at 2.44mmbpd in contrast to demand of just 1.14mmbpd (same as 2019). The US continues to be primary driver of global supply growth (+1.7mmbpd), accompanied by Brazil (+0.4mmbpd) and Norway (+0.2mmbpd) next year. Finally, OPEC expects demand for its crude to be ~29.3mmbpd in 2020, implying over 500mbpd surplus volumes vs. June production of 29.8mmbpd (despite already cutting supply more than pledged). Overall, with OPEC forecasting supply growth 2x demand growth next year, it's hard to be constructive on oil macro without seeing meaningful retrenchment in US volumes or OPEC amplifying production cuts; however, US operators have already budgeted in the $50/bbl WTI range, suggesting further (price enforced if necessary) discipline could be necessary, and it's unclear how much more market share Saudi and Co. are willing to surrender to keep markets in equilibrium.