Oil prices will continue to trade in a narrow range for the rest of the year, and the average Brent price next year will not exceed $50 a barrel, the monthly Reuters poll of analysts showed on Friday.
According to 41 analysts and economists surveyed by Reuters, the second wave of coronavirus cases in major economies will further delay the economic and oil demand recovery, while growing supply out of Libya will also weigh on prices.
The only factors that could take oil out of range-bound trade for the rest of the year are the U.S. presidential election next week, and some very good news about a vaccine, Raiffeisen analyst David Olzant told Reuters.
The election next week is set to increase volatility in all markets, including the oil market. A Joe Biden win on November 3 could be positive for oil prices in the long run because more regulations and a ban on new leases on federal lands could lead to a decline in U.S. oil production, Goldman Sachs said earlier this month. But a President Biden could also pave the way to the U.S. returning to the Iran nuclear deal with potential sanctions relief. A return of Iranian oil supply would be bearish for oil prices.
In the shorter term, concerns about demand in the second pandemic wave are the biggest factor for oil prices, according to analysts, and those polled by Reuters do not expect that prices will rise too much until demand is firmly on the track to recovery.
The analysts expect Brent crude prices to average $42.32 per barrel this year, slightly down from the $42.48 projection in last month’s poll and almost in line with the average price of $42.45 so far in 2020. Next year, the analysts polled by Reuters expect Brent prices to average $49.76 per barrel, down compared to $50.41 expected a month ago.
WTI Crude prices are seen averaging $38.53 per barrel this year, slightly down from $38.70 a barrel expected last month.
Early on Friday, prices were seesawing and headed for a second consecutive month of losses after the sell-offs earlier this week prompted by growing concerns about global oil demand.
By Tsvetana Paraskova for Oilprice.com
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At this point, we really don't know where the oil price is heading.