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Oil Market Snapshot – October 2020 Brent Dips Below $40/bbl as October Ends, With France and Germany Locked Down

  • Brent has averaged $40.48/bbl in October so far, down c. $1.66/bbl against September, as a second wave of COVID-19 infections across the OECD weighs on demand
  • The benchmark declined sharply below the $40/bbl mark at the end of the month as the major European economies of France and Germany went back into national lockdown
  • We see Brent averaging $41.71/bbl in 2020 and $50.03/bbl in 2021 (-$0.37/bbl and unchanged on previous, respectively) due to weaker demand outlook
  • Our global demand growth forecast for 2020 decreases to -8.51 million b/d (-290,000 b/d on previous)
  • Longer term, the IEA sees oil broadly maintaining its share of the global energy mix by 2030 under its "stated policies" scenario, even as growth in renewables surges
  • Our global supply growth forecast for 2020 decreases to -6.6 million b/d in 2020 (-80,000 b/d on previous) due to revisions to OPEC NGL output
  • Libya's production is returning at pace while demand looks weak, leaving OPEC+ to contemplate extension of the current level of cuts into 2021
  • On current forecasts, global inventories grow by 1.14 million b/d in 2020 on average (+40,000 b/d on previous) as demand lags supply
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