Barclays Raises 2020 Oil Demand Forecast
January 22nd, 2020
Crude oil and refined product prices fell slightly yesterday despite a major crude oil supply disruption in Libya over the weekend. The market continues to be pressured by downgrades to world economic growth, good inventory levels in spots around the world, high spare capacity for OPEC, and record high US crude oil production with the outlook for more growth. ULSD futures also are coming under more selling pressure as we have already had a very warm winter so far and warmer forecast for the balance of January historically the coldest US month.
Barclays Bank yesterday raised it 2020 oil demand forecast by 50,000 bpd as a result of a stronger than expected recovery in global economic growth. The investment bank now sees global oil demand will grow by 1.4 million bp in 2020, versus a growth rate of 900,000 bpd in 2019. The bank also raised its demand forecast for bot the United States and China in 2020 as a result of the recent Phase 1 deal being reached. /d in 2020, versus a growth rate of 900,000 b/d in 2019. The bank did leave unchanged its price forecast for 2020 with WTI crude oil prices averaging $57 dollars per barrel and Brent crude oil $62 per barrel.
In Baghdad and other southern Iraqi cities including Basra, Karbala and Najaf have seen several days now of violent anti-government protest.
The outbreak of the coronavirus has been getting a lot of attention and now it appears that it could impact energy markets. Goldman Sachs has said they believe that the price of crude oil could fall $3 dollars per barrel due to the new coronavirus due to a drop in oil demand. This virus started in China and has spread to the rest of the country with 440 confirmed cases and 9 confirmed dead. One case has now been reported in the Unites States. Goldman Sachs has used the impact that the SARS epidemic in 2002-2003 on global crude demand and translated that into today’s numbers and come up with an estimate that 260,000 bpd could be cut from demand. There are arguments that China is being much more cooperative this time around than back when SARS happened. Definitely a matter to keep our eyes on.
Due to the holiday on Monday the inventory reports will both be delayed one day.
International Energy Agency Executive Director, Fatih Birol, said a surplus of one million bpd of oil is expected to limit prices in the first half of 2020.