Morgan Stanley further cut its oil price forecast, now expecting Brent crude to average $30 a barrel during the second quarter, from $35 a barrel earlier.
Reuters quoted the investment bank as saying, "Temporary sell-offs to even lower levels are possible, if not likely."
Barclays also revised its oil price forecast earlier this month. The UK bank now expects Brent to average $43 a barrel in 2020, with West Texas Intermediate at $40. That's down from an earlier forecast of $59 for Brent and $54 for WTI. Even earlier, Morgan Stanley said it expected Brent crude to average $55 a barrel in the second quarter, down from $57.50 earlier, and WTI to trade at around $50 a barrel, down from $52.50.
For now, Goldman is the most pessimistic. The investment bank said last week we could see Brent fall as low as $20 a barrel if the oil price war between Russia and Saudi Arabia continues long enough.
It was this war, rather than the prospects of a global recession on the back of the coronavirus outbreak, that "completely changes the outlook for oil and gas markets," according to Goldman analyst Daniel Courvalin, as quoted by Business Insider. "The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus," Courvalin said.
International agencies are also revising their forecasts, for oil demand this time. The EIA, the IEA, and OPEC all expect demand to take a beating this year, mostly because of the coronavirus, again.
Worse may be yet to come, at least according to Rystad Energy.
"Oil prices have reacted extremely negatively and we believe ... that we have not seen the bottom of the oil price just yet," the Norwegian consultancy said, as quoted by CNBC. "The potential loss of demand in March-April may dwarf anything the World has ever seen, just when OPEC+ producers open the floodgates of new supply to the market."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More