Oil prices to face additional downside risk from coronavirus in 2Q2020
BAKU, Azerbaijan, Feb.27
By Leman Zeynalova – Trend:
Oil prices are expected to face additional downside risk from coronavirus in the second quarter of 2020, Trend reports citing Rystad Energy, an independent energy research and business intelligence company.
As China’s coronavirus epidemic continues to expand and more countries are affected, the slowdown in global oil and gas consumption this year will hit suppliers who will see average prices fall below previous expectations, according to Rystad Energy’s revised forecasts.
Brent crude oil prices, which Rystad Energy earlier expected to average nearly $60 per barrel in 2020, are now forecast to slump to about $56 per barrel for the year following revisions to its January forecasts.
Another negative revision might be around the corner due to the increasing downside risk, according to the company.
“Brent has come under renewed downwards pressure this week, trading below $55 per barrel as news of rising numbers of coronavirus cases across the world have spooked market participants. Rystad Energy’s latest crude oil market balances suggest that the epidemic’s net impact on oil demand could create almost the same amount of surplus crude barrels during the second quarter of 2020 as it will in first quarter of the year,” said the company.
“The surplus may amount to nearly 1.8 million barrels per day without any additional production cuts in the market, assuming Libya’s production returns to normal during the second quarter. Rystad Energy therefore sees additional downside risk to crude prices from today’s $55 levels during the second quarter, unless at least 1 million barrels per day are removed from the quarter’s market balances.”
The outbreak in the Chinese city of Wuhan - which is an international transport hub - began at a fish market in late December 2019. The number of people killed by the disease is nearing 3,000. Over 82,000 people have been confirmed as infected.
Some sources claim the coronavirus outbreak started as early as November 2019. The symptoms include cough, headache, fatigue, fever, aching and difficulty breathing. It is primarily spread through airborne contact or contact with contaminated objects.
Chinese health authorities say that the majority of the people who have died were either elderly or had underlying health problems.
Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in South Korea, Italy, Japan, Singapore, Hong Kong, Iran, Thailand, the US, Taiwan, Australia, Malaysia, Germany, Vietnam, the UAE, the UK, France, Macau, Canada, Philippines, India, Russia, Spain, Lebanon, Nepal, Cambodia, Israel, Belgium, Finland, Sweden, Egypt and Sri Lanka.
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