- Brent has risen to c. $35/bbl in May as demand lifts from its lows, US inventories ease and OPEC+ cuts start to take effect, though the benchmark was a little below this level after a build in US inventories
- There is now talk of extending the 9.7 million b/d cuts level to the end of the year, though we question whether this would be widely adhered to as demand starts to return
- We now see Brent averaging $34.49/bbl in 2020 and $51.34/bbl in 2021 (-$0.10/bbl and +$8.64/bbl on previous, respectively), though 2021 faces downside risks from a resurgence of COVID-19
- Our global demand growth forecast for 2020 is now -6.12 million b/d (-230,000 b/d on previous), incorporating wider expectations of a more prolonged recovery in the global economy
- The short term demand nadir appears to be passed, but full recovery is now expected to take longer
- Our global supply growth forecast for 2020 is -7.02 million b/d in 2020 (-1.29 million b/d on previous), revised down on further voluntary OPEC cuts and involuntary declines in US LTO
- We see US LTO declining 1.1 million b/d on average in 2020 (-141,000 b/d on previous) on more...
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by Graham Walker // 29 May, 2020
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