There does not appear to be any turnaround of fortunes as far as the demand for crude oil is concerned till 2020. OPEC is trying to retain its market share while the United States allowed export of oil after four decades. Any thought of the weaker oil price boosting the demand has failed to catch the policy makers. In fact, the demand for oil for the period until 2020 has been slashed from the produced level. That is a bad news for the oil companies, who are hoping for improved demand from the second half of the next year.
The weaker oil price has allowed some countries to slowly remove the price controls on petroleum products. Similarly, the developing nations are using the lower oil price as the right time to remove the subsidies given to oil and gas sectors. Effectively, such countries restrict the demand for growth of oil, the OPEC believes. Therefore, lower oil price would not stimulate the demand for oil as expected. It was also a fact that the same countries resorted to reducing some taxes whenever the oil price surged and traded above $100 level. Obviously, such nations bring back the taxes to bridge the deficit.
As the investments have already been in some of the ongoing projects, there is also an expectation that such units would add supplies to the current levels. That meant supplies would continue to witness growth in a much better phase than the demand. The alternate source of energy in the wake of emission impacting the weather conditions also plays a part in limiting the demand.
Global Oil Outlook
The OPEC, which consisted of 12 nations, released its world oil outlook. The outlook pointed out that it needs to produce one million less than it produced last month by the year 2020. However, the organization said that it would produce 1.7 million barrels a day more than it estimated last year. That means, the OPEC would pump 30.7 million barrels per day before the end of the year 2020. The estimation is also lower by 300,000 barrels per day for the current year. Indonesia rejoined the group in the current month, and its production was not taken into account.