Things are not looking up for the crude oil market. Despite OPEC’s best efforts to stabilize the market and bring oil prices up, the results have been mixed. The price is certainly consistently higher than it was at the start of the oversupply crisis of 2015. However, slowing global economic growth - made even worse by the United States’ trade wars - is keeping demand for oil low, preventing the asset from appreciating.
A recent poll among economists organized by Reuters indicates that they expect oil to remain in a state of oversupply throughout 2020. Based on projections reflecting the current market conditions, oil prices are unlikely to go beyond $65 per barrel next year.
The Organization of Petroleum Exporting Countries will have another summit on December 5-6 in Vienna to discuss the future. Because of the oversupply of oil on the global market, it is highly expected that OPEC will renew its agreement to keep oil output levels low.
The extra supply comes from the United States; the country has been pumping more and more oil, to the point that it has become the world’s largest producer of oil, with the biggest share of the market. The US is not a member of OPEC and is not bound by the rules of the cartel.
Russia is another interesting case, as the country seems to support OPEC and willingly abide by the agreement to curb production, but in recent months has also been exceeding its quotas.
