Rising coronavirus cases and statistics are keeping demand concerns fresh. Oil prices are likely to stay in the $ 40-45 range a barrel for the rest of the year, and the challenge of recovery into 2021 is a tough road ahead.
Brent crude oil prices estimated LCOc1 to average of $ 42.32 per barrel in 2020, according to a survey. This is slightly lower than the $ 42.48 forecast in the previous survey, and the average of $ 42.45 so far this year.
The 2021 outlook was also lowered from last month’s consensus of $ 50.41 to $ 49.76 per barrel.
The WTI crude oil futures CLc1 is estimated to average $ 38.53 per barrel in 2020 compared to the $ 38.70 consensus in September.
As the markets prepare for the November 3 US elections, the resumption of Libya supply will continue to keep prices under pressure. The two main factors that could break the current pressure in 2020 are the US elections and surprisingly good vaccine news.
Production in the USA has increased again recently. Biden’s victory and a softer policy on Iran could trigger over-supply fears.
With the situation in Libya further balancing, a major oil exporter may regain its former power.
One factor that overshadows the outlook is that OPEC and its allies are planning to increase production by 2 million barrels a day from January 2021, following the record production cuts they decided and implemented earlier this year. However, it is clear that the second wave of COVID-19 is slowing demand and will complicate manufacturers’ efforts to balance the market.
A possible improvement in demand will be at an erratic and slower pace in the coming months until an effective vaccine is widely available.