Brent crude oil prices to increase by end of 2020
BAKU, Azerbaijan, Aug.12
By Leman Zeynalova - Trend:
The US Energy Information Administration (EIA) forecasts Brent crude oil prices will increase to $44/b by the end of the year, slightly higher than the July 2020 average price, Trend reports.
Global inventory withdrawals through the end of 2021 will put upward pressure on crude oil prices, which EIA forecasts will average $50/b in 2021.
EIA forecasts high petroleum stock withdrawal rates will put modest upward price pressure from current prices through the end of 2020. However, the currently high inventory levels (as a result of the large stock builds from January through May 2020) are forecast to mitigate any significant increase in prices.
Crude oil prices developed a narrow trading range in July as price volatility declined to the lowest levels since January 2020. Global petroleum demand continued to recover in July, but continued growth in global coronavirus cases could bring renewed lockdown measures and presents considerable uncertainty to global oil demand for the remainder of the year.
“World oilweighted real gross domestic product (GDP) declined 9.3 percent in the second quarter of 2020—one of the largest declines for any quarter on record—however, a number of leading indicators suggest increases in economic activity since then in some sectors, such as manufacturing,” reads the EIA report.
Despite the continued demand-side uncertainty, global petroleum production remains subdued from rapid declines in U.S. crude oil production as well as oil supply management from members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+), according to the report.
“The group plans to ease production cuts by nearly 2 million barrels per day (b/d) in August, but it is committed to monitoring global inventory levels and could adjust production levels lower if global demand growth slows.”
Follow the author on Twitter: @Lyaman_Zeyn