OPEC and some non- OPEC oil ministers recently met in Vienna to address growing surpluses in the market. So far, the Brent crude oil price seems to have found a floor, remaining close to $60/bbl.
The meeting was a reminder that the "big three" of oil -- the U.S., Russia and Saudi Arabia -- whose total liquids production now comprises about 40 percent of the global total, are the dominant players. The U.S. is now the world's biggest crude oil producer, where production management is a company-level, economically driven decision. The U.S. is also the world's biggest consumer and welcomes lower prices, although its producers will want to see them stay high enough to encourage further investment.
While the U.S. was not present in Vienna, nobody could ignore its growing influence. On the day OPEC ministers sat down to talk, an important piece of data was published: According to the EIA, in November the U.S. was a net exporter of crude and products for the first time since at least 1991. Even if this proves to be an isolated data point, the long-term trend is clear. In 2018, U.S. net imports have averaged 3.1 million barrels a day (mb/d), whereas 10 years ago, just ahead of the shale revolution, the figure was 11.1 mb/d. As production grows inexorably, net imports will decline and rising U.S. exports will provide competition in many markets.
New 2019 data shows little change from 2018 estimates. Demand will grow by 1.3 mb/d, although the pace is slackening in some countries as the impact of higher prices lingers. As far as non- OPEC supply is concerned, the estimate for growth is revised slightly to 2.4 mb/d. The demand growth outlook remains at 1.4 mb/d. The supply growth forecast for 2019 has been revised down by 415,000 b/d, partly due to lower growth in Canada.
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