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OPEC chief says rival oil supply could underperform in 2020

Published 13/11/2019, 15:53
© Reuters. The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters ahead of the OPEC and NON-OPEC meeting in Vienna

By Rania El Gamal

ABU DHABI (Reuters) - U.S. shale oil supply growth could slow down next year, OPEC's secretary general said on Wednesday in his latest indication that the oil market in 2020 could surprise to the upside.

Mohammad Barkindo said there would likely be downward revisions of supply going into 2020 especially from United States shale, adding that some U.S. shale oil firms see output growing by only around 300,000-400,000 barrels per day.

"This is coming from the companies themselves, who are saying our (OPEC's) numbers are more optimistic," he told reporters. "We are more optimistic than them. They expect a sharper deceleration."

"We are likely to see sharp revisions of non-OPEC supply going into 2020 particularly from the shale basins in the United States," he said.

That would reduce a headwind that OPEC and its allies such as Russia have faced in their efforts to curb output and support the market.

Brent crude (LCOc1) is trading at $62 a barrel, lower than the level many OPEC countries' economies need to break even.

Barkindo also said that Saudi Arabia, OPEC's top producer and de facto leader, has reassured the exporting group that a stock market listing of oil giant Aramco would not affect the kingdom's role in the group or commitment to output deals.

He said he was confident that the Organisation of the Petroleum Exporting Countries and its allies would continue with a supply curb agreement in 2020 and that the fundamentals of the global economy remained strong.

"Growth of 3% or north of 3% in our opinion is robust," he said. "This fog is gradually clearing from the global economy."

Last week, Barkindo said the market outlook for next year may have upside potential, appearing to downplay any need to cut output more deeply.

© Reuters. The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters ahead of the OPEC and NON-OPEC meeting in Vienna

OPEC and its allies, known as OPEC+, meet on Dec. 5-6 to set oil policy. Their current deal to cut supply runs until 2020.

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