Global oil markets were roughly balanced in 2019, as oil supply declined slightly and global oil consumption grew at its slowest pace since 2011, the Energy Information Administration reported Tuesday in the January Short-Term Energy Outlook (STEO).
EIA expects global oil supply will rise by 1.6 million barrels per day (Mmbpd) in 2020, and global oil consumption will rise by 1.3 Mmbpd, contributing to global oil inventories rising at a pace of 0.3 Mmbpd, Kallanish Energy reports.
Supply growth in 2020 is led by countries that are not Opec members, particularly the U.S., Norway, Brazil, and Canada.
EIA expects non-Opec producers will increase oil supply by 2.6 Mmbpd in 2020, which will more than offset forecast supply declines of 1.0 Mmbpd from Opec members.
In the first half of 2020, EIA expects global oil inventory builds of 0.5 Mmbpd will contribute to Brent spot prices falling to an average of $62 per barrel by May, from an average $67/Bbl in January.
The relatively weak market balances EIA is forecasting for the first six months of 2020 occur amid market concerns about potential supply disruptions.
However, a forecast of inventory growth and Opec spare capacity of more than 2.0 Mmbpd could help reduce upward price pressure in the case of a limited disruption to oil supply or transportation, according to EIA.
For all of 2020, EIA forecasts global oil inventories will build by 0.3 Mmbpd and Brent prices will average $65/Bbl.
Oil balances in EIA’s STEO begin to tighten in mid-2020, and in 2021, global oil supply growth slows. Non-Opec supply growth slows to 0.9 Mmbpd in 2021, driven by a decelerating pace of growth in U.S. tight oil.
EIA expects Opec supply to add another 0.1 Mmbpd of growth, bringing total forecast global supply growth for 2021 to 1.0 Mmbpd.
EIA forecasts global oil consumption growth will average 1.4 Mmbpd in 2021, and with consumption growth outpacing supply growth, EIA expects inventories to draw by 0.2 Mmbpd.
These draws contribute to EIA’s forecast that Brent prices will rise to an average of $68/b in 2021.
This post appeared first on Kallanish Energy News.