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The economic impact from COVID-19 continues to grow, with crude oil prices falling amid fear of demand declining. Economists at ANZ Research expect less demand and further cut productions by the OPEC while they have downgraded oil price forecasts.

Key quotes

“We now expect global oil consumption to fall by 1.6mb/d in H1 2020. Growth will return in H2, however not enough to offset these losses. We see global demand falling by around 300kb/d in 2020.” 

“Assuming the OPEC production cuts remain in place, the call on OPEC is approximately 27mb/d in H1 2020. That would require an additional cut of at least 1mb/d from the OPEC+ alliance to stop inventories building any further. This sets up an interesting OPEC meeting.” 

“We expect the production cut to be extended to the end of 2020 and an additional cut to output of between 7501,000kb/d. Anything less and the market will be unimpressed.”

“We have downgraded our price forecasts consequently, with Brent likely to push below USD50/bbl before a mild recovery into year-end.”