Analysts at Danske Bank explained the oil market remains in uncharted waters and the coming months could present a swift reopening of economies, which would be positive for oil consumption, or a second wave of infections could lead to another round of lockdowns and a renewed drop in oil consumption.
Key Quotes:
“Oil consumption has started to recover as economies reopen. Demand has received a further boost from a drop in USD. On top of this, OPEC+ production cuts are doing their part of the rebalancing of supply and demand. The return to more normal market conditions is a long uphill ride.”
“OPEC+ stands committed on output cuts now, but as the oil price recovers, the commitment may start to falter. On a medium to long-term horizon, low investment activity now may result in supply shortages.”
“OPEC+’s commitment to the output cut deal could also be tested if compliance does not hold up – it is not long ago Saudi Arabia and Russia were on the verge of a price war.
“The recent rally in oil prices along with our more positive view on the outlook for world economic growth and the small extension of OPEC+ output cuts have led us to revise higher our forecasts. We now look for Brent to average USD40/bbl in Q3 and Q4, USD45/bbl in Q1 and Q2 next year, USD50/bbl in Q3 and USD60/bbl in Q4.”
Share
