EU Commission revises oil price forecasts up

Oil&Gas Materials 7 July 2020 14:57 (UTC +04:00)
EU Commission revises oil price forecasts up

BAKU, Azerbaijan, July 7

By Leman Zeynalova – Trend:

Brent oil price is expected to be around USD 42/bbl in 2020 and USD 43/bbl in 2021, Trend reports with reference to the European Commission’s Summer 2020 Economic Forecast.

In euro terms, this would imply an upward revision of around 7 percent and 4 percent in 2020 and 2021, respectively, compared to the spring forecast.

“After some pronounced volatility in oil prices in April, Brent crude prices have partly recovered and stabilised at around USD 40/bbl. On the supply side, the recovery was supported by the sizeable OPEC+ production cut agreement that came into effect on 1 May and which is expected to last until the end of July. Meanwhile, the acute storage capacity exhaustion in April has turned out to be less severe than feared. Over the forecast horizon, upward price pressures are expected to be largely contained as several producers are ready to step up production in case of further price increases,” reads the report.

The European Commission said in its Spring 2020 forecast that in an environment of extreme uncertainty around the unfolding COVID-19 pandemic and the growing jitters over the global economic outlook, oil and commodity prices are set to remain subdued over this year and next, well below earlier expectations.

“As a result, the assumptions for Brent prices are revised downwards to an average of 38 USD/bbl in 2020 and 40 USD/bbl in 2021, down by 33 percent and 28 percent, respectively compared to the autumn Forecast. In euro terms, downward revisions as compared to the autumn forecast amount to 32 percent and 27 percent, respectively. These developments are expected to further dampen the economic prospects for many oil-exporting countries, in addition to limiting their fiscal space to counter the health shock in a context of exacerbating financial vulnerabilities. On the other hand, potential positive effects from lower oil prices in oil importing countries would be impaired in the nearterm by the depressed demand conditions in view of restrictive public health measures effectively shutting down large parts of their economies,” said the Spring 2020 forecast.


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