JP Morgan has said that the Organisation of Petroleum Exporting Countries (OPEC) might have to cut its crude output by as much as 1.2 million barrels per day to rein in the spiraling oil prices after it revised its outlook on Brent crude to $73 per barrel on average from $83.50/per barrel.
Oil prices continue to spiral downwards, Brent crude slumped to $59 over a possibility of supply glut following increasing inventories from Saudi Arabia and U.S.
The cartel itself is said to be discussing cuts of between 1 million barrels per day and 1.4 million barrels per day. Crude production from the 15-member cartel stood at 32.9 million barrels per day in October.
Scott Darling, the head of the bank’s Asia-Pacific oil and gas operations, told analysts that the increase in supply in North America which will occur in the second half of 2019, would eventually pressure prices even lower in 2020, to an average of $64/ per barrel in that year.
Other investment banks might follow suit, and would soon begin revising their forecasts unless they are certain that OPEC and its allies will agree a production cut at its Vienna meeting next month.
This cut is by no means concrete and is purely speculation, but it might be the only positive factor that can work in oil prices’ favour. Even the latest production numbers from OPEC’s kingpin, Saudi Arabia, were bearish for prices.
Bloomberg reported, citing industry insiders that the Kingdom’s oil production since the beginning of this month jumped to new highs, reaching 10.8-10.9 million barrels per day and U.S. stockpiles have risen for nine straight weeks.
Russia has yet to weigh in but a Reuters report citing two senior Russian government officials said the country would rather not join an OPEC-led cut this time, despite the fact that Vladimir Putin, Russian President said at an industry event that Russia will cooperate with OPEC on oil prices.