Brent oil prices expected to average US$62/bbl in 2020

Brent oil prices expected to average US$62/bbl in 2020
25 February 2020

Brent oil is forecast to average US$62/bbl in 2020 on the back of voluntary (Saudi Arabia, Kuwait, UAE) and involuntary (Iran, Venezuela) declines in OPEC supply, according to a Bank of America (BofA) Global Research report. OPEC supply is expected to decline 1.2mbpd from the 4Q19 into the 4Q20, however, a roughly stable output is then seen through to 2025.

The BofA report also projects Brent oil prices to average between US$50-70bbl from now until 2025. "As prices become more anchored around US$60, we believe volatility implied in oil options could trend lower in the medium term. In contrast to last year, we see more support to our price outlook on increased capital discipline across the US shale industry, despite coronavirus risks," states the report.

The bank’s projections assume OPEC+ will continue to lose its share in the global oil market, particularly if pandemic risks rise again. More broadly, oil as a share of the overall global energy market is also expected to decline as the petroleum mix moves away from gasoline and heavy ends to distillates and NGLs.

Published under Cement News