for Non-Opec Supply
Low oil prices and soaring budget deficits have provided motivation for emerging markets to scrap the status quo with regards to fuel subsidies. Despite short-term pain from liberalizing prices, as seen currently in Mexico, longer-run benefits of curbing oil demand growth will emerge.
In just the past two weeks since OPEC announced it plans to cut output, the cartel has significantly altered market sentiment and shifted the oil market outlook for next year.
A major consultancy says that the oil market will still take longer to rebalance than many analysts had reckoned because of supply-side trends both in OPEC and outside the group. A slew of new non-OPEC fields will ramp up to increase the global crude oversupply to a massive 1.8 mbd for 1H 2017.
The recent Fact Pack from Securing America's Future Energy (SAFE) contains a number of data points that highlight OPEC’s dilemma and discuss energy issues that surfaced during the 2016 presidential campaign.
OPEC's past cuts were successful in tightening the global oil market and lifting prices, but the agreement last week in Algiers may not be sufficient to rebalance fundamentals, particularly since U.S. shale is poised to rebound.
While now is a time of unique challenge for OPEC and the future of the organization is up in the air, this is not the first time the cartel has faced external threats.
Forecasting oil markets has always been complicated and fraught with risk. Now is no different, with so much price volatility and global uncertainties.