BAKU, Azerbaijan, Oct. 30
By Leman Zeynalova – Trend:
Oil prices are projected to average $60 per barrel in 2019 and are forecast to weaken to $58/bbl in 2020, $7/bbl lower than the previous forecast, Trend reports citing the World Bank (WB).
The downward revision reflects the weaker outlook for global growth and therefore for oil demand, according to the WB report.
“On the supply side, although US production increases have been modest in 2019, they are expected to rise substantially by 2020 as new pipelines come into operation. The forecast assumes that production cuts by OPEC and its partners will be sustained into 2020. Risks to the oil price outlook are to the downside,” said the WB.
The report shows that oil consumption growth is expected to increase slightly next year at a level usually associated with global downturns.
“If economic growth deteriorates further, oil demand could be substantially weaker. Conversely, the recent attack on Saudi Arabia’s oil processing facilities serves as a reminder that geopolitical events remain a major risk that could drive up oil prices, despite the short-lived impact of the recent attack,” said the report.
“On the demand side, oil consumption growth is expected to recover somewhat in 2020, according to the latest estimates by the EIA, IEA, and OPEC, although all have been revised down from earlier assessments. The increase in growth in 2020 is driven by a rise in OECD consumption, while non-OECD growth is expected to remain unchanged at just under 2 percent,” said the Bank.
For supply, IEA forecasts indicate non-OPEC production growth will accelerate next year to 2.2 mb/d. Growth in the United States is expected to moderate but remain robust, while new fields coming onstream in Brazil and Norway will boost production. As such, IEA expectations for non-OPEC production growth in 2020 are currently almost double their expectation for consumption growth.
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