In the base forecast Agency Argus said that the current recovery in oil prices can be volatile, as markets now play a weakening of quarantine restrictions and the prospective increase in demand. But in reality, the economic recovery may be weaker than expected. Subject of the decline of the pandemic during the summer, the quotes of barrel of North sea oil in summer, will average $ 19 per barrel by the end of the year will rise to $ 30 per barrel, said in the forecast.
“Even if full recovery of oil demand in the third quarter and the continuation of OPEC+, a rebound to pre-crisis levels will require another six months”, – said Director of corporate ratings ACRA Basil Tanurkov. From his point of view, in the medium term prices will continue to rise and the price of Brent crude by the end of 2020 will be in the range of 40-45 dollars per barrel.
the probability of a price decrease or stop their growth this summer is quite high. The surplus oil remains on the market, and the growth of quotations is supported by only a partial recovery of demand in the markets of Asia-Pacific countries and expectations of a recovery in Europe is still poorly supported by real numbers.
“In the second quarter of this year the market will continue to stabilize, but only in the third quarter, production cuts will begin to reduce the glut of oil in storage,” – says chief strategist at commodity markets Saxo Bank OLE Hansen. In his opinion, a full recovery of demand and prices from 50 to 70 dollars a barrel is not necessary to hope in 2020, and possibly even next, 2021.
Hansen identified several risk factors for the recovery of the oil market:
– re-growth of number of diseases Covid-19 by weakening the quarantine.
– the ability of OPEC to maintain high level of performance of terms of transaction on production cuts;
– the growth of oil production in the United States at prices above $ 30 per barrel (especially the producers, lack of funds);
– changing consumer habits (less flights and work from home).
To that list you can also add geopolitical risks. According to Basil Tanurkov, the dynamics of oil prices this summer will not only depend on the pace of recovery in demand, but also the negative impact on them more probable new round of trade wars between China and the United States, as well as the rate of falling production outside of OPEC.
you can also remember about possible exacerbation of the conflict between the US and Iran, as well as not cloudless relations in the sphere of energy of the USA with Russia. In early March of this year, after the collapse of the deal last OPEC+ in Washington even did not exclude the application of sanctions to the entire oil industry of our country. In addition, as recoverythe issuance of a demand, but save the excess oil will intensify the struggle for markets, which will also have a negative impact on the prices of a barrel.
