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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Needs Strong Demand Recovery To Break Out Above $40


Oil prices are unlikely to go much higher than current levels if global oil demand recovery doesn’t pick up in a meaningful way in the second half of the year, the monthly Reuters poll of analysts and economists showed on Friday.  

According to 43 experts surveyed by Reuters, Brent Crude prices will average $41.50 per barrel in 2020, an upward revision of $1 a barrel compared to last month’s forecast of $40.41 per barrel. The U.S. benchmark, WTI Crude, is projected to average $37.51 a barrel in 2020, up from $36.10 per barrel forecast in the previous survey.

In last month’s Reuters poll, analysts said that oil prices were unlikely to jump in any significant way this year despite the OPEC+ production cuts as the economic and oil demand recovery are set to pick up steam only in the fourth quarter.

In this month’s survey, analysts expect oil prices to move slightly higher, but lingering uncertainties over the oil demand and economic recovery will continue to cap price gains.

Resurging COVID-19 cases in many parts of the world, including in the world’s top oil consumer, the United States, may slow down the re-opening of the economies and slow down the pace of the demand recovery, according to the analysts.

A major bullish factor for prices could come from the development of an effective vaccine soon—this could accelerate economic recovery and, consequently, global oil demand recovery, the experts in the poll said.

Oil prices have been range-bound in recent weeks as signs of demand recovery have been dampened by spiking coronavirus cases in many countries. California returned to lockdown two weeks ago, while the UK re-imposed on Friday some lockdown measures in the Greater Manchester area and other parts of northwest England after the number of new cases surged.

Earlier this month, the International Energy Agency (IEA) said that global oil demand was set to crash by 7.9 million barrels per day (bpd) this year, but this forecast was slightly more optimistic than last month’s expectation of an 8.1-million-bpd demand drop. The IEA, however, noted that the recent rise in COVID-19 cases and the reinstating of partial lockdowns in some countries continue to weigh with uncertainty on the world’s global oil demand in 2020.

By Tsvetana Paraskova for Oilprice.com


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  • Maxander on July 31 2020 said:
    Oil demand is already very much stronger on MoM basis & also the production cuts are in place. But major reason right now for Oil not going up much above $40 is commodity investors' focus on Gold prices. Actually huge money has flown into Gold ETFs dwarfing the fundamental change in oil commodity.
    Oil prices won't rise beyond one level only through demand, supply equation cycles . It requires strong investments from financial instruments as well from investors
  • Maxander on July 31 2020 said:
    Higher demand & lower production if only half battle won for crude oil. Remaining half is from financial instruments which deploy money into ETFs, futures, options.
    The investment drag from Crude Oil ETFs is another strong reason for Crude oil prices not rising beyond one level.
  • Mamdouh Salameh on July 31 2020 said:
    Given the collapse of oil prices in the first half of 2020 and the huge glut in the market, it will be reasonable to assume that oil prices could average $41.50 a barrel in 2020.

    I am, however, projecting that oil prices could hit $45-$50 in this half of the year and touch $60 in early next year. I am also projecting that global oil demand will reach 96 million barrels a day (mbd) in 2020, just 5 mbd less than in 2019 compared with the International Energy Agency’s (IEA’s) 7.9 mbd.

    It is possible that the IEA might have overlooked in its projection the powerful bullish factor of US oil production struggling this year and the following years to even produce 6-7 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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