Extended oil supply cuts by OPEC+ producers are expected to create a monthly deficit of crude and condensate starting from June 2020 to at least the end of 2021, according to a report by an independent energy research and business information company. The report suggests that negative oil prices due to oversupply will not occur again as long as OPEC+ members comply with their production quotas.
According to the study, a global production deficit of .5 million bpd had already taken place this month. The imbalance is expected to widen to 4.6 million bpd next month before peaking at 5.2 million bpd by January 2021. The report projects that the deficit will remain throughout 2021.
The study expects that worldwide crude and condensate output will remain lower than 80 million bpd in the rest of this year. It projects that global output will increase to 78.4 million bpd in December from 71.4 million bpd in June. One the other hand, demand is expected to reach 72.9 million bpd this month and increase further to 82.3 million bpd in December.
These dynamics are expected to boost oil prices and spur reactivation of shut production in the United States. There is also a possibility that US supply will recover faster than OPEC+ expects.
