Brent has collapsed to $50/bbl on 28th February, after a brief bounce at $55/bbl, as fears of weaker demand grip global markets due to the coronavirus outbreak.
We see Brent averaging $63.66/bbl in 2020 and $64.53/bbl in 2021 (-$2.21 and -$2.11 on previous, respectively) if the virus is contained and China recovers swiftly.
Incorporating the current futures strip, Brent may average $58/bbl, though there is significant risk on both sides to this number, as it is unclear whether the virus will be contained or grow into a pandemic.
Our global demand growth forecast for 2020 is trimmed to 940,000 b/d (-280,000 b/d on previous) on expectations of weaker GDP growth in 1Q and 2Q20 due to containment efforts targeting the virus.
Our global supply growth forecast for 2020 is 910,000 b/d in 2020 (-370,000 b/d on previous), with Libya’s production cut by 1 million b/d and OPEC+ mulling further cuts.
Majors expect to spend around 2% more on capex in 2020 y-o-y, and profits took a dip in 4Q2019.
OPEC+’s Joint Technical Committee has called for 600,000 b/d of further cuts in 2Q2020, followed by the existing targets ...
Please log in to view the rest of this report.
Not yet a subscriber? Contact us today!
If you do not yet have an account with us and would like to register or find out more, please contact us
using our client services form, send an email to
admin@petrologica.com or call us on +44(0)1206 823 295.
