The Market Is Close To A Key Turning Point in the Recovery
The Outlook For Oil Prices Is Improving
According to RogerDiwan and IHSMarkit energy consultancy services, the oil market has returned to a relatively stable level, with Brent crude within a narrow range of $40 to $45 a barrel and likely to finally break through the $50 mark in the second half of 2021.
IHSMarkit raised its average brent price forecast to S $42.35 per barrel in 2020 and to S $49.25 per barrel in 2021, up by US $7.09 and US $5.25 per barrel respectively from its May forecast.
Hit hard by the worst of the COVID-19 epidemic, the oil market is now at a delicate turning point, moving into the second of three phases of the oil market recovery predicted by IHSMarkit.
RogerDiwan, vice President of financial services at IHSMarkit, said Record production cuts in May and June by Saudi Arabia and its Opec partners had played a key role in accelerating the rebalancing of the global oil market. As demand recovers from its April lows and the market has another month to get on its feet, these exporters have now moved from managing direct surpluses during the crisis to managing the recovery.
The second phase of the recovery is a delicate transitional phase, in which excess inventories shrink and supply increases as the ViennaAlliance and the North American oil-producing states restore idle capacity.
Opec + and the US will resume production of 4 m b/d in July and August. Meanwhile, the recovery in global demand is showing clear signs of stabilising.
IHSMarkit expects average Brent prices to remain in a range of $40 to $47 a barrel for the next four quarters, unless a second coronavirus outbreak causes widespread economic stagnation.
This period of stability will make way for the recovery process more structural phase, at this stage, demand gradually normalization, the organisation for economic co-operation and development business inventories to make most of Russia and the gulf, major producers have renewed their spare capacity and can begin as early as in the second half of 2021, when brent crude oil prices may eventually finished just above $50 a barrel.
