Crude Market Seen in Ugly Territory in 2020

After half a decade of lower spending on new projects, oil production growth was supposed to slow to a trickle just as demand was supercharged by a once-in-a-generation shake up in the shipping fuel market. Many market commentators predicted that if $100 a barrel oil was going to make a comeback, it would happen in 2020.
Excitement is fading fast. The first official assessment of 2020 comes from the International Energy Agency on Friday, but a first look at forecasts from consultants and traders for supply and demand balances show persistent surpluses, not the deficit that was expected to underpin rising prices, Bloomberg reported.
The culprits include rising shale production, a slowing global economy and the prospect of a deepening trade war.
"The balances for 2020 were already worrisome, and the downgrade in demand we are contemplating put them potentially in the ugly category," said Roger Diwan, an OPEC watcher at consultant IHS Markit Ltd.
Consultants and oil traders have already taken a first stab, and their supply and demand results show, at best, a balanced market. Many forecast supply will exceed consumption, perhaps by a large margin.
The oil market, showing characteristics typical of an equity market, is already starting to reflect the potential for a surplus in 2020. Despite a tight physical market due to Russia’s pipeline contamination crisis and US sanctions on Iran and Venezuela, oil prices briefly dipped below $60 last week, down more than 20% from a high above $75 in late April.