BAKU, Azerbaijan, March 4
By Leman Zeynalova - Trend:
Oil prices still have a chance to rise later in 2020, Trend reports with reference to UK-based Capital Economics research and consulting company.
The company said that the prices of energy commodities have been particularly hard hit by the outbreak of coronavirus. However, Capital Economics says this is not particularly surprising given the collapse in road travel in China and the risk that tourism and travel will also be disrupted elsewhere.
“In fact, oil prices might have fallen further were it not for hopes that OPEC+ will cut output again at its early-March meeting. Even if we assume that OPEC+ cuts by an additional 1m bpd, the market will be in surplus in H1. However, we expect demand to pick up later in the year and give a boost to prices,” reads the report published by Capital Economics.
In general, the company said commodity prices continued to fall in February as the coronavirus, which started in China, spread to most other regions of the world and sparked fears of a slowdown in global economic activity.
“We have revised down our forecasts of commodities demand and prices in the first half of this year, but expect policy loosening, in particular, to be a factor giving a lift to prices later in 2020.”
Capital Economics expects Brent prices to end the first quarter of 2020 with $62 per barrel, rising to $65 per barrel in the second quarter.
The company predicts that Brent prices will continue the upward trend in the subsequent quarters, reading $70 per barrel and $75 per barrel in the third and fourth quarters of 2020, respectively.
Brent prices will remain at the level of $75 per barrel in the first quarter of 2021, then rising to $76 per barrel in the second quarter, according to Capital Economics.
As for the West Texas Intermediate (WTI) oil, the company expects $60 per barrel in the first quarter of 2020, with an increase by $4 per barrel in the second quarter of the year.
The third quarter of 2020 will see WTI prices rising to $67 per barrel and then to $72 per barrel in the last quarter of 2020.
WTI will see a modest growth to $72 and $73 per barrel in the first and second quarters of 2021, respectively, according to Capital Economics.
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