Despite production cuts from OPEC+ and North America and slowly improving demand, oil prices are not expected to average much higher than current prices in 2020 because of renewed U.S.-China tensions, the monthly Reuters poll of dozens of oil analysts showed on Friday.
According to 43 analysts surveyed by Reuters, the U.S. benchmark WTI Crude is set to average $32.78 a barrel in 2020, which is roughly where the contract was trading early on Friday.
Brent Crude prices are expected to average $37.58 per barrel this year, the analysts in the Reuters poll predicted. Experts have lifted their forecasts for both benchmarks compared to the April poll, when WTI Crude was expected to average $31.47 a barrel and Brent Crude was seen averaging $35.84 per barrel.
So far this year, Brent Crude prices have averaged $42.37 a barrel.
Early on Friday, oil prices were down on the day more than 2 percent and on track for a first weekly loss in five weeks. However, after the ‘black April’ for oil demand and oil futures, this month the price of oil has rallied by nearly 40 percent, so despite being on course for a weekly loss, prices were on track to score the best monthly performance since March 1999.
For the average prices in 2020, analysts expect the cuts from major producers in and outside the OPEC+ pact and the recovering demand to support oil in the coming months. However, renewed U.S.-China tensions over China’s new security laws for Hong Kong have been weighing on equity and oil markets in recent days. The analysts polled by Reuters expect that price gains from improving fundamentals could be capped by flare-ups in the U.S.-China relations, which could damage the post-coronavirus economic recovery and trade.
Earlier this week, Morgan Stanley said it expected Brent Crude to trade at $40 a barrel by the end of the year thanks to the recovery in demand, which has taken off faster than the bank had predicted.
By Tsvetana Paraskova for Oilprice.com
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