BAKU, Azerbaijan, Dec.10
By Leman Zeynalova - Trend:
Brent spot prices will average $61 per barre in 2020, down from a 2019 average of $64/b, Trend reports citing the US Energy Information (EIA).
“Brent crude oil spot prices averaged $63 per barrel (b) in November, up $3/b from October. EIA forecasts Brent spot prices will average $61/b in 2020, down from a 2019 average of $64/b,” reads the EIA report.
EIA forecasts that West Texas Intermediate (WTI) prices will average $5.50/b less than Brent prices in 2020. EIA expects crude oil prices will be lower on average in 2020 than in 2019 because of forecast rising global oil inventories, particularly in the first half of next year.
“The increase in crude oil prices over the past month likely reflected modest upward pressures from both demand-side factors and supply-side factors. On the demand side, economic data from the world’s two largest economies—the United States and China—reduced market perceptions of an upcoming slowdown in economic activity,”
reads the report.
The US Bureau of Economic Analysis released its second estimate of third-quarter 2019 gross domestic product (GDP). This estimate indicated that real U.S. GDP increased at an annual rate of 2.1% in the third quarter, a faster rate than previously estimated and an increase from growth of 2 percent in the second quarter. For China, the Caixin/Markit manufacturing purchasing managers’ index (PMI) for November was 51.8, up from 51.7 in October and the highest level since 2016. Any reading higher than 50 indicates an expected expansion in manufacturing activity.
On the supply side, markets adjusted expectations ahead of the December 6 meeting between the Organization of the Petroleum Exporting Countries (OPEC) and partner countries. Expectations that OPEC and its partners would extend or possibly deepen the cuts, as noted in press reports, helped support crude oil prices. Ultimately, the group decided to deepen existing production cuts by 0.5 million b/d, but the cuts were not extended and continue to run through the end of March 2020.