In a market update, Bjørnar Tonhaugen, head of oil market research at Rystad Energy, argues that a balanced oil market in 2020 is contingent on these pillars:
1. No global recession
2. Continued OPEC production cuts
3. The effect of new IMO 2020 regulations
In its latest Oil Market Balances Report, published this week, Rystad Energy finds that the market can come into balance in 2020.
However, a balanced market in 2020 also implies that the global economy does not enter a technical recession and that demand recovers to around 1.2 million bpd growth. OPEC needs to maintain current production levels, with extended cuts through at least 2020.
Rystad Energy forecasts that crude oil and lease condensate production growth outside of OPEC and Russia will reach 2 million bpd in 2020, down 0.2 million bpd from the previous estimate. The US oil supply forecast for December 2020 is revised down by 0.5 million bpd to 14.0 million bpd, according to the independent energy research firm.