Community of Petroleum Exporting Countries (OPEC) when they meet this week, they will discuss extending the time rather than reducing the current production target.
BloombergAccording to the analysis in USAbelieves the brutal increase in oil production will slow down rapidly next year.
According to sources with information about the subject, IraqIn a statement Sunday, OPEC and its partners would discuss a deeper production cut-off, but followed the coalition's signal that they are largely reluctant to take such a step.
OPEC is not alone. Throughout the sector, oil traders and top executives expect US production to grow slower in 2020 compared to this year and slow down significantly compared to 2018. On paper, the oil market is under OPEC's control.
Brent oil traded around $ 60 per barrel for most of 2019 and rose 14 percent from the start of the year, but it is well below the peak of this year, at $ 75.60 at the end of April.
Commodity Transactions Mercuria Energy Group Ltd.president Marco Dunand"Saudi Arabia is being reasonable in keeping the market stable," he said, "but there are some things to warn of: OPEC will need to monitor US production very closely."
However, Saudi Arabia and its partners should be cautious in underestimating competition from the US and other non-OPEC producers.
US oil production rose to an all-time high in September with 17.5 billion barrels per day. This amount is more than 1.3 million barrels a day compared to a year ago. This expansion will probably continue until the beginning of 2020 before it slows down.
Production Will Continue to Increase
On the other hand, the slowdown in production growth does not mean that there will be no increase. Big Oil is now operating more in key oil regions such as Permian, while independent companies that drive the increase in rock oil production in the United States are facing difficulties and announcing that they will go to large spending cuts. Exxon Mobile Corp. and Royal Dutch Shell Plc. Larger companies like the United States will probably increase their spending and increase production in Texas, New Mexico and other regions.
Vitol group, the world's largest independent oil trader, expects US production to increase by 700,000 barrels per day between December 2019 and December 2020. US production increased 1.1 million barrels per day between the end of 2018 and the end of 2019.
Perhaps the biggest problem for OPEC is not the US, but production growth elsewhere. Production in Brazil and Norway is increasing and will increase further in 2020. After a few years of low oil price, engineers have made many projects cheaper and the results are clearly visible.
Production began earlier this year at Johan Sverdrup, Norway's largest oilfield, which was developed after a long time in the North Sea. The budget for this field, which was put into operation months ago, was a few billion dollars lower than the original. And in Latin America, Guyana, a small neighboring country to Venezuela, is close to realizing its first oil production.
Icin For OPEC, the first half of 2020 will remain challenging, Vit said Vitol CEO Russell Hardy. "US output is growing strongly this quarter and there will be additional productions from non-OPEC countries such as Norway, Brazil and Guyana in the first quarter of next year. "