- Brent has traded around $45/bbl in August, after four consecutive weekly US crude inventory draws, though stocks remain elevated
- Still, global COVID-19 cases have resumed an upward trend after European lockdown measures were eased, leading to them being reimposed in some hotspots
- We see Brent averaging $41.81/bbl in 2020 and $51.05/bbl in 2021 (+$2.28/bbl and -$0.29/bbl on previous, respectively)
- Our global demand growth forecast for 2020 is down marginally at -7.97 million b/d (-200,000 b/d on previous), as jet fuel demand continues to lag
- Recent Chinese demand has been stronger than expected, though this is partially explained by stocks of crude and products being built up to cover refinery maintenance
- Our global supply growth forecast for 2020 is -6.7 million b/d in 2020 (+230,000 b/d on previous), mostly due to expectations of a smaller decline from Canada
- This would leave global inventories building by 670,000 b/d in 2020 on average, leaving a large inventory overhang into 2021
- OPEC expects an inventory overhang nearly double that size, even if OPEC achieves 100% compliance through year end...
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by Graham Walker // 25 August, 2020
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