- Brent has fallen to $22/bbl despite a fresh agreement on April 13th to curtail global production by 9.7 million b/d, while May WTI closed at -$37/bbl, negative for the first time as some traders got caught with undeliverable oil
- An agreement of this size was already priced in, and is manifestly inadequate to the scale of the demand decline even assuming 100% compliance
- We now see Brent averaging $34.39/bbl in 2020 and $42.70/bbl in 2021 (-$3.94/bbl and -$1.22/bbl on previous, respectively), with further downside risk if global storage is maxed out
- Our global demand growth forecast for 2020 is now -5.89 million b/d (-4.44 million b/d on previous), incorporating more of the effect of the ongoing pandemic on the global economy
- Visibility on the demand side is very limited at present, so we follow the major agencies in cautioning readers that the above figure may prove a conservative estimate
- Our global supply growth forecast for 2020 is -4.82 million b/d in 2020 (-6.91 million b/d on previous), as the collapse in demand leads to shut in production and minimal capex from April 2020 onwards
- We see US LTO declin...
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by Graham Walker // 23 April, 2020
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