Our current forecast for the 2018 liquids balance is almost 0.5 million b/d (this includes OPEC/non-OPEC extension up to end-2018), up from a 300,000 b/d deficit this year (see Market Watch – Issue 10).

  • In the run-up to the OPEC/non-OPEC meeting on 30 November, current indications and clear potential for a massively oversupplied market in 2018 without market management are supportive of an extension of the deal beyond Q1-18.
  • However, a continuation of the cut would bring a flat balance taking into consideration Chinese continued stockbuilding needs.
  • In other words, any supply disappointment or demand surprise brings with it the potential for higher prices unless OPEC/non-OPEC start to work on a staged exit strategy. We do deem prices above $60 per barrel to be detrimental to OPEC interests, as they are likely to trigger additional supply (e.g. US shale) and demand (e.g. more hybrid/electric car sales).