Strategists at UOB Group’s Quarterly Global Outlook noted that prices of the European reference Brent crude could slip back to the $20.00 mark per barrel in the short-term.
Key Quotes
“The sharp sell-off in crude oil has resulted in a steep contango last seen during the GFC. Concurrently, crude oil implied volatility exploded to almost 200%.”
“Going forward, we believe that risks remain for Brent to test the USD 20 / bbl downside in 2Q. Thereafter, energy demand is expected to stay weak in the coming quarters as the global economy tries to heal itself. Thus, we further downgrade our Brent forecast to USD 20 in 2Q, USD 25 in 3Q, USD 30 in 4Q and USD 35 in 1Q21. Only a surprise reconciliation between Saudi Arabia and Russia will be able to trigger a stronger recovery in energy prices.”
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