Citigroup has slashed its oil price forecasts for three of the quarters this year and doesn’t rule out Brent Crude sliding to as low as $47 a barrel as the bank now sees the impact of the coronavirus on oil demand—and the economy in general—as being more severe than initially thought.
Citi slashed its forecasts for commodity prices across the board, with crude oil getting the steepest downgrade, the investment bank said in a note, as carried by Bloomberg.
Citigroup now sees Brent Crude averaging $54 a barrel in Q1, down by a massive $15 from the previous forecast of $69. The forecast for WTI Crude prices was slashed to $50 a barrel this quarter, also down by $15 from a previous estimate of $65 per barrel.
The bank also cut its estimates for the following two quarters this year, expecting the impact of the coronavirus outbreak to be longer and to linger across the global oil market until the fourth quarter.
Citi sees Q2 Brent Crude prices at $50, down from a previous forecast of $68 a barrel. Third-quarter Brent Crude prices are now expected at $53, down from $63 a barrel. For Q4, Citigroup revised up its forecast to $58 from $57 a barrel.
At 07:30 a.m. EDT on Monday, Brent Crude was down 0.57 percent at $56.32, while WTI Crude was up 0.02 percent at $51.57 in skittish trade as the market continues to grapple with fears of oil demand destruction due to the virus amid talks that OPEC is considering moving up its March meeting to mid-February and even cutting production by another 500,000 bpd to keep oil prices from falling further.
The market is also digesting reports of China’s oil demand falling by 20 percent due to the virus.
“With this in mind the market will keep a close eye on OPEC this week for signs of price support through additional measures to curb supply,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday.
By Tsvetana Paraskova for Oilprice.com
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