VIENNA: The oil market outlook for next year may have upside potential, the secretary-general of producer group OPEC said on Tuesday, appearing to downplay any need to cut output more deeply.
The Organization of the Petroleum Exporting Countries and its allies led by Russia will meet in December. The so-called OPEC+ alliance, seeking to boost oil prices, has since January implemented a deal to cut output by 1.2 million barrels per day until March 2020.
OPEC’s Mohammed Barkindo said he was more optimistic about the market outlook for next year than he had been in October, when he had said all options were open including a deeper cut to oil output amid forecasts of oversupply.
“Based on the preliminary numbers, 2020 looks like it will have upside potential,” he told a briefing on Tuesday. “There are definitely brighter spots. The numbers are looking more refined and the picture is looking brighter.”
“The other nonfundamental factors like trade issues that have been impacting negatively on the global economy, the news coming out is more optimistic. We have seen the biggest economy in the world, the US, continuing to defy projections, racing ahead.”
OPEC’s figures suggest there will be excess supply next year due to rising production outside the group. This prospect and issues such as the US-China trade dispute have weighed on oil prices, which at around $62.70 a barrel are down from a 2019 high above $75.
On whether the market looked oversupplied for next year, Barkindo said: “We are not there yet. We will not be able to at this point preempt all the steps that we are working through.”
Those steps, he said, include upcoming meetings of OPEC technical committees, such as its Economic Commission Board, and the next OPEC monthly oil market report, which looks at global demand and supply, due on Nov. 14.
Earlier, Barkindo also said Brazil would be welcome to join the 14-country oil producer group but had not yet made an official request to do so.
“They would be most welcome to join,” he told reporters, adding that consultations had taken place in Riyadh.
Brazilian President Jair Bolsonaro said last month that he wants his country to join OPEC, a move that would add the most significant new producer to the oil cartel for years but met with skepticism in Brazil’s energy industry.
OPEC on Tuesday released its 2019 World Oil Outlook, in which the producer group said it would supply a diminishing amount of oil in the next 5 years as output of US shale and other rival sources expanded.