OPEC+ oil ministers point to a massive surplus early next year as their justification for sticking to a plan of only modest production increases. But those forecasts are built on fanciful numbers — and they’re wrong.
It doesn’t matter which of the three oil market forecasts presented last week to the OPEC+ group you look at, they all show the same thing in different degrees: The current tight oil market will soon evaporate, to be replaced by one in which supply is running ahead of demand and global stockpiles are rising again. That switch, however, is based on highly inflated estimates of the group’s own future production.
In the most optimistic case, from the producer group’s point of view, a supply deficit of 2.7 million barrels a day in the third quarter of 2021 becomes a surplus of 2.5 million barrels a day in the first quarter of next year. Supply continues to run ahead of demand for the whole of 2022, returning global oil stockpiles to a level slightly above those seen at the end of 2020 by the end of the year.
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