Page 5 - MEOG Week 11

MEOG Commentary MEOG
But more shocks are on the horizon as the world’s main crude oil consumer - the US - begins its own war on the deadly virus.
With the declaration of coronavirus as a “pandemic” by the World Health Organisation (WHO) and the closing of borders, and travel and social gathering restrictions, oil demand took a beating.
in its march report the international Energy Authority (iEA) gave a range of estimates from the pessimistic low case based on a slow recovery as the epidemic spreads further in Europe, Asia and beyond, in which global oil demand could decline by 730,000 bpd in 2020.
in a more optimistic high case, with the situ- ation coming swiftly under control in China and the most serious contagion remaining limited to a few countries and use of transport being closer to normal, global oil demand could grow by 480,000 bpd in 2020.
in other words, you can take a gloomy or sunny view and the figures will follow.
Looking to oil prices, analysts surveyed by Reuters considered that they will remain in the range of $30 to $40 per barrel in the coming months; this contrasts with a similar exercise carried out in February, when they expected the average cost of Brent this year to be $60.63 per barrel.
in the second quarter of 2020, Reuters’ 21 analysts predicted the average cost of a barrel of Brent to be about $34.87, in the third quarter $39.05, and in the fourth quarter $44.08.
Russian Energy minister Alexander Novak predicted that oil prices will recover to the range of $40-45 by the middle of this year. His country’s budget has an assumption of $57 for the average price of oil this year, but that is very likely to be adjusted down soon.
At a time of a world health pandemic and major hits in certain industries, the fall in oil prices has come at a particularly bad time, and the outlook for calmer days ahead is very fragile.™
Week 11 18•March•2020 w w w . N E W S B A S E . c o m P5