Anyone wanting to make sense of the energy market in 2020 should watch three key indicators. The significant drivers of the market next year will be non-Opec oil production, Chinese oil imports and — more complexly — the influence of politics around climate change. Beyond these, the rest is mere noise.
The first starts with the US, where the boom in tight oil from shale rock continues even though the natural gas sector faces downgrades and shut-ins because of chronic oversupply. Total oil production in the US has risen to more than 12m barrels a day. A further increase is expected in 2020.
But new production is also due on stream next year from Brazil, Norway and Guyana. If non-Opec production rises by more than 1m b/d — which is the forecast level of demand growth — the market will be oversupplied, and even the latest quota agreement by the cartel and Russia will not be sufficient to avoid a further fall in prices.