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OPEC+ has decided to extend the current production cuts by a month and strategists at OCBC Bank expect the crude oil market to enter a supply deficit by October 2020 while forecast Brent near $50/bbl by year-end.

Key quotes

“OPEC+ has extended its current supply cuts by a month to July 2020. The current output reduction of 9.7mbpd was expected to expire this month; the months of July to December would only see a production reduction of 7.7mbpd.”

“We now estimate that the crude oil market could return to a supply deficit by October 2020. This is one month earlier than if OPEC+ had stuck with its original schedule.”  

“The crude oil market is expected to experience a sharp supply deficit in late Q4, when demand may reach within 3% of pre-Covid 19 levels but OPEC+ still keeps to its original supply schedule. The stress may prove short-lived when 2mbpd of supply returns from January 2021.”

“We now estimate Brent to finish 2020 close to $50/bbl.”


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