Bank of America Raises 2020 Oil Price Forecast
January 21st, 2020
The energy markets were closed yesterday and as we get back to normal trading session today the market is still feeling that pressure to test lower. Good inventory levels, the outlook that supply will outpace demand for the first quarter of this year, and some weaker numbers from China on their economy. These and other negative factors continue to put selling pressure on the market. On the other had there is optimism from the signing of the Phase 1 United States and China trade agreement, as well as, the United States, Mexico, and Canada trade deal getting signed.
The market is trying to balance all this out and prices have falling from the events in the Middle East that spiked prices about 2 weeks ago. Prices have now moved all the way back down from that peak to about where the rally begin back in late November early December. If the bulls are able to get this market to congest and trade sideways for a while, then there is still the chance for it to put in a bottom and keep the seasonal trend alive for a climb higher into the spring. If the bull cannot do that soon and the bears move this market lower and take out support, then there will be more selling and a run lower to test the next levels of support and keep a weak outlook in this market.
OPEC’s Secretary General, Mohammad Barkindo, said the next meeting between representatives of the OPEC+ group of oil producers will take place in March. He said none of the participants had asked for the time of the meeting to be changed.
Bank of America Global Research raised its 2020 oil price forecasts, citing risks to supply from the Middle East. The bank upgraded its average 2020 Brent price outlook to $62 per barrel from $60 per barrel and WTI price forecast to $57 per barrel from $54 per barrel. The bank expects global demand to increase by 1.1 million bpd during this year, while its supply and demand outlook suggested a surplus of 190,000 bpd.
The IMF downgraded its outlook for global economic growth. It said the growth in key emerging economies, including India, had not been as good as previously forecast.