Last week, OPEC+ raised production in January to only 25% of the volume initially agreed upon, after end-user demand figures came in around 2 million b/d short of what OPEC had initially forecast back in April.
The importance of OPEC+ adopting a gradual supply adjustment scheme – consisting of monthly amendments of at most 500,000 b/d – becomes even more relevant considering the market share that could be lost to US producers if prices approach pre-COVID levels too fast.
Under a $70 per barrel flat price scenario, US production would gain momentum faster than anticipated over 2021, possibly reaching a peak of more than 12 million b/d by year-end against our current base case of 11 million b/d.
11 Dec 2020 Featured in: Crude Oil Barrel - Issue 12
Research Highlights - Week 50
OPEC+’s flexible production cut amendments will keep US shale from gaining too much market share in 2021 (see Crude Oil Barrel – Issue 12).