The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has started the year with a cut in oil output by an additional 500,000 barrels per day (bpd) while Saudi Arabia also extend its voluntary restriction of 400,000 barrels.
The cut will reduce oil output by 2.1 million bpd in total. However, the big uncertainty still remains with how much can the U.S., as the world’s leader in oil production, pumps its output when it has been speculated that the U.S. production has passed its peak and would not be able to grow at the same rate as it previously has. The analyst warns of the potential for “vicious corrections” in the coming months.
The International Energy Agency forecasted that the U.S. oil production growth will slow to 1.1 million bpd in 2020, down from 1.6 million bpd in 2019. In this regards, the analyst expects that oil prices should be traded in the $60 to $70 price range.